U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
LITIGATION RELEASE NO. 18335 / September 10, 2003
ACCOUNTING AND AUDITING ENFORCEMENT RELEASE NO. 1852 / September 10, 2003
, Case No. H-03-3628 (S.D. Tx.)
SEC CHARGES BEN F. GLISAN, JR., ENRON'S FORMER TREASURER, WITH SECURITIES
FRAUD
Glisan Consents to Anti-Fraud Injunction and Officer and Director Bar
The Securities and Exchange Commission ("Commission") today charged
Ben F. Glisan, Jr. with violations of the anti-fraud, lying to
auditors, periodic reporting, books and records, and internal controls
provisions of the federal securities laws. The Commission's complaint,
filed in U.S. District Court in Houston, alleges that Glisan
participated in Enron's manipulation of its reported financial results
through a series of fraudulent transactions designed to inflate
Enron's earnings and operating cash flows, while at the same time
concealing the full extent of its debt. The fraudulent transactions
included the "Raptor" sham hedges used by Enron to avoid earnings
write-downs of over $1 billion, the fraudulent "sale" of an interest
in Nigerian barges to Merrill Lynch, and "prepay" transactions, which
were loans disguised as commodity sales contracts, used by Enron to
overstate its cash flows by hundreds of millions of dollars.
Simultaneously with the filing of the complaint, Glisan agreed to file
a consent and final judgment settling the Commission's action against
him. In the consent, Glisan has agreed, without admitting or denying
the allegations of the complaint, to the entry of a final judgment
permanently enjoining him from violating, directly or indirectly,
Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Securities
Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5,
12b-20, 13a-1, 13a-13, 13b2-1 and 13b2-2. Glisan has also agreed to
the entry of an officer and director bar against him.
The Commission's complaint alleges that Glisan and others used the
Raptors to manipulate Enron's financial statements. Raptor I was
created in April 2000 through an off balance sheet SPE, called Talon
LLC. Enron formed Talon to hedge against potential declines in certain
of its mark-to-market investments. Although Enron provided most of
Talon's funding, $30 million of its funding was from LJM2
Co-Investment, L.P. (the entity formed by Enron's former CFO, Andrew
Fastow, to transact business with Enron), representing the purported
3% outside equity required for Talon to be off Enron's balance sheet.
SNIPPETS:
U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON,
Glisan Consents to Anti-Fraud Injunction and Officer and Director Bar
The Securities and Exchange Commission today charged Ben F. Glisan,
The Commission's complaint, filed in U.S. District Court in Houston, alleges that Glisan
The fraudulent transactions included the "Raptor" sham hedges used by Enron to avoid earnings
Simultaneously with the filing of the complaint, Glisan agreed to file a consent and final
In the consent, Glisan has agreed, without admitting or denying the allegations of the
Raptor I was created in April 2000 through an off balance sheet SPE,
Enron formed Talon to hedge against potential declines in certain of its mark-to-market
Although Enron provided most of Talon's funding, $30 million of its funding was from LJM2
Glisan knew that Talon was not properly off Enron's balance sheet because it would not engage
Glisan and others removed the risk by Enron and Talon entering into a "put," that is, a
Although it had no true business purpose, Enron purchased the "put" option for $41 million.
Talon failed to meet the minimum equity test as required by the accounting rules for off
The transaction was necessary for Enron to meet year-end reporting requirements, including
Enron used these transactions to report loans from financial institutions as cash from
Action No. H-03-2877 and In the Matter of Citigroup, Inc., Administrative Proceeding File No.
|
