Risk & Compliance

Feds Say Skilling Tried to ‘Deceive’ SEC

Former Enron president testified about one sale of 500,000 shares but allegedly concealed an attempted sale of 200,000 more.
Stephen TaubJanuary 4, 2006

Federal prosecutors have alleged that former Enron Corp. president Jeffrey Skilling attempted to “deceive” the Securities and Exchange Commission in a December 2001 deposition, according to The Wall Street Journal.

Skilling’s sale of 500,000 Enron shares, on September 17 of that year, came less than three months before the energy giant filed for bankruptcy, the paper pointed out.

The specific allegation of deceit is new, noted the Journal; he already faces a charge of insider trading. The newspaper added that prosecutors are seeking to use the SEC testimony against Skilling and former Enron chairman Kenneth Lay, scheduled to begin January 30.

Daniel Petrocelli, Skilling’s lead defense attorney, told the Journal that “Mr. Skilling attempted to deceive no one, and the government knows it.”

According to the paper, which cited a court filing by the Justice Department’s Enron Task Force, Skilling said during his deposition that he sold the stock on September 17, 2001, because of concerns about the impact of the prior week’s terrorist attacks on the overall stock market. “There was no other reason,” Skilling reportedly testified. “Oh, I agonized over it, absolutely agonized over it.”

Reportedly, however, the court filing also asserted that Skilling failed to inform the SEC that he had tried to sell 200,000 shares of Enron on September 6 through Charles Schwab Corp. For either technical or administrative reasons, that trade wasn’t completed.

“Skilling’s attempt to deceive the SEC about the reason for his sale in sworn testimony gives rise to an inference that material nonpublic information was a factor in his decision to sell in September 2001,” the government reportedly argued in its filing.

Petrocelli told the paper that Skilling’s September 6 brokerage call about possibly selling some Enron stock “had nothing to do with any concerns about the company. He was thinking about beginning to diversify some of his holdings, which were virtually all in Enron stock.”