Man Without Qualities

Tuesday, February 11, 2003

So Many Loose Ends

As noted below, even the New York Times has decided that former Enron Chairman Kenneth Lay probably did not engage in insider trading when he sold many of his Enron shares. That means that Mr. Lay probably did not have material inside information when he sold.

But if the Chairman and Chief Executive of Enron didn't have material information not shared by the public, how likely was it that other Enron Board members or even the sad Mr. Duncan knew more? Did Mr. Duncan plead guilty to obstructing an investigation that he never expected to turn up anything material? That would certainly go a long way to justify the Andersen jury's refusal to accept Mr. Duncan's confession. And how likely is it that Arthur Andersen generally knew anything material in connection with the matter for which it was destroyed by the Department of Justice for obstructing its investigation? - and this conviction obtained on the basis of an incorrect construction of the law and jury and court error.

But surely this New York Times article is making Andrew Fastow and his attorneys very, very happy - especially since they now have extra time to incorporate these developments into his defense.

How many juries are going to easily listen to the government admit that there is not enough evidence to charge Mr. Lay - but Mr. Fastow belongs in the slammer? Beyond a reasonable doubt? Really? It could happen.

But would anyone plan to make a buck - or a career - betting on it?

MORE: One might ask why the Times finds religion now. The only big, public, active aspect of the Enron matter now that I know about is Mr. Fastow's trial. That trial is probably going to be a government disaster, in my opinion. (The Times says, for example: "The sides agreed to establish a room where all lawyers could have access to the paperwork, which ... numbers in the hundreds of thousands of pages." If one need hundreds of thousands of pages to make a case against an individual, there's almost certainly a reasonable doubt.) If that is true, my guess is that both sides can already feel it coming. The Times may be picking up leaks out of that. That would explain why the story runs now. But, of course, that's just speculation. [Thanks to Don Luskin for raising this point.]

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