“The government did a good job of keeping the focus on the heart of the case — that Lay and Skilling knew the company was in grave trouble yet told investors many falsehoods,” said SMU Law Professor Linda Eads. “Government prosecutors did not allow the case to be sidetracked into an endless debate over accounting details. The evidence was just overwhelming that they knew what was going on, put pressure on underlings to make the numbers look better than they were, and then went out and painted a rosy picture to the investing public. This is exactly the sort of CEO behavior that our financial system cannot tolerate if the system is going to work.”
Eads also said the verdict is part of a larger story being played out in Houston, where there are many civil cases of investors and Enron employees against accountants and lawyers who allegedly helped the Enron leadership in this fraud.
“This verdict affirms that protecting the investing public from similar collapses will be accomplished only if those who are gatekeepers, such as lawyers and accountants, do their jobs also,” said Eads.
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