Nov 29, 2022 · 3h 32m · acquired
Enron · Acquired
David Rosenthal · 1h 40m spoken Ben Gilbert · 1h 28m spoken Christina Cacioppo · 1m spoken Ben Miller · 1m spoken
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In this deep dive, Acquired hosts Ben Gilbert and David Rosenthal chronicle the meteoric rise and catastrophic collapse of Enron, exploring how pioneering energy deregulation transformed into systemic accounting fraud and executive hubris. The episode breaks down the financial mechanics of mark-to-market accounting and off-balance-sheet vehicles while analyzing the enduring corporate governance lessons and regulatory reforms that followed.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ben and David hold 98.5% of the talking time here. How this is scored →
Ben and David as informed peer 6.6 Guest teaching 1.7 Guest disagreement 0.0 Ben and David pushing back 0.0
speaking balance: gold is Ben and David, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:58:11 Skilling curses at analyst on earnings call
Skilling angrily lashes out and calls short seller Richard Grubman an asshole when questioned about omitting balance sheets.
Hardest push from Ben and David ▶ 2:26:33 Ben pushes back on run-on-the-bank framingBen firmly refuses the executive framing that Enron was merely a victim of a run on the bank, arguing runnable banks are fundamentally irresponsible.
Biggest teaching moment ▶ 2:50:18 David reveals the $6.79 post-bankruptcy payoutDavid surprises Ben with the discovery that purchasing Enron equity at 61 cents post-crash yielded a 10x payout following bank settlements.
Ben and David hold their own ▶ 3:09:30 Ben explains the double-DCF valuation anomalyBen clearly demonstrates financial expertise by articulating how mark-to-market accounting combined with equity multiples created an n-squared valuation trap.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ben and David as informed peer | Guest teaching | Guest disagreement | Ben and David pushing back | Why |
|---|---|---|---|---|---|---|
| Acquired Theme Song: Who Got the Truth | 3 | 2 | 0 | 1 | Ben Miller explains Fundrise's Innovation Fund offering 10 for 10 uncapped SAFEs. The co-hosts ask standard clarifying questions in a friendly sponsor segment. | |
| Macro Backdrop: 1970s Stagflation and Volcker Hikes | 6 | 1 | 0 | 0 | David and Ben discuss the macro landscape of the 1970s stagflation, Volcker rate hikes over 19%, and initial energy deregulation under Carter. | |
| Rise of Kenneth Lay: Missouri to Houston | 6 | 1 | 0 | 0 | David narrates Kenneth Lay's early background, PhD in economics, government work, and pioneering of the natural gas spot market at Transco. | |
| The HNG-InterNorth Merger and Culture Clash | 7 | 2 | 0 | 0 | The hosts detail the merger between HNG and InterNorth, the board coup by Lay, and young McKinsey consultant Jeff Skilling advocating for Houston. | |
| Rebranding to Enron: From Enteron to Paul Rand | 5 | 1 | 0 | 0 | David and Ben discuss the naming disaster of Enteron, Paul Rand designing the logo, and Lay forgiving early rogue trader losses in New York. | |
| Jeff Skilling's Gas Bank and Energy Derivatives | 7 | 2 | 0 | 0 | The hosts explain Skilling's 'Gas Bank' concept, creating energy derivatives, and bootstrapping supply by financing exploration and drilling. | |
| Mark-to-Market Accounting: Skilling's Non-Negotiable Condition | 7 | 2 | 0 | 0 | Ben explains mark-to-market accounting as Skilling's non-negotiable hiring condition, while introducing Lou Pai and structured finance head Andrew Fastow. | |
| Compounding Phantom Revenue with Mark-to-Market Accounting | 8 | 2 | 0 | 0 | Ben and David break down the mechanics of booking 20 years of discounted future cash flows on day one and double-dipping via special purpose entities. | |
| International Megaprojects: The Dabhol Disaster in India | 6 | 1 | 0 | 0 | The hosts review Enron's aggressive international expansion, specifically the massive unviable Dabhol LNG power plant project in India. | |
| Secret Spreadsheets, Chewco, and Undisclosed Self-Dealing | 8 | 2 | 0 | 0 | David and Ben chronicle the creation of Fastow's LJM funds, Chewco, secret spreadsheets on Michael Kopper's laptop, and undisclosed self-dealing. | |
| Sponsor: Automated Security Compliance with Vanta | 3 | 2 | 0 | 0 | Christina Cacioppo explains Vanta's automated compliance and SOC II tooling in a standard sponsor segment. | |
| Enron Energy Services and the Staged Floor | 7 | 1 | 0 | 0 | Ben recounts the California energy trading schemes like Ricochet and Death Star, plus the staged trading floor set up to deceive visiting Wall Street analysts. | |
| Executive Hubris, Cognitive Dissonance, and Stock Obsession | 7 | 2 | 0 | 0 | The hosts discuss the fake Blockbuster video-on-demand deal, Enron Online's data advantage, executive cognitive dissonance, and stock price obsession. | |
| The Infamous April 2001 Earnings Call Outburst | 7 | 2 | 0 | 0 | The hosts detail Bethany McLean's Fortune article, deteriorating return on invested capital, and Skilling calling analyst Richard Grubman an asshole on an earnings call. | |
| The $34B Debt Discovery and Sherron Watkins Memo | 8 | 2 | 0 | 0 | Skilling suddenly resigns, Lay returns to find $34B in unrecorded debt obligations, and Sherron Watkins writes her whistleblower memo. | |
| The Raptors Unravel: Fastow Fired and Junk Downgrade | 7 | 2 | 0 | 0 | Arthur Andersen frantically shreds tons of documents, Fastow is fired once his $60M partnership take is uncovered, and the Raptors unspool. | |
| Enron Files Chapter 11: The Empire Collapses | 7 | 2 | 0 | 0 | The Dynegy rescue merger collapses, Ken Lay's family foundation dumps shares minutes before news breaks, and Enron files for Chapter 11 bankruptcy. | |
| Indictments, Political Fallout, and Sarbanes-Oxley | 7 | 2 | 0 | 0 | The hosts discuss bankruptcy administrator John Ray III, political blowback on the Bush administration, and the near-unanimous passage of Sarbanes-Oxley. | |
| Convictions, Lay's Death, and Skilling's Sentence | 6 | 1 | 0 | 0 | The hosts cover executive convictions, Ken Lay's death and vacated verdict, and Jeff Skilling serving 12 years before founding a new energy venture. | |
| Berkshire Buys Pipelines and $7.2B Shareholder Settlement | 8 | 2 | 0 | 0 | David reveals how Berkshire Hathaway acquired the original pipelines and how a $7.2B bank settlement gave 61-cent shareholders a 10x distribution. | |
| Analysis: Evaluating Enron's Competitive Power and True Business Model | 7 | 2 | 0 | 0 | Ben and David analyze Enron using Hamilton Helmer's 7 Powers, distinguishing between the legitimate pipeline monopoly and the lack of structural power in trading. | |
| Playbook: Mark-to-Market Accounting, Correlated Risk, and Executive Incentives | 8 | 2 | 0 | 0 | The hosts dissect playbook takeaways: mark-to-market accounting flaws, double discounting future cash flows, correlated asset risk, and distorted executive incentives. | |
| Historical Perspective: Enron's Scale, Executive Compensation, and Sarbanes-Oxley | 7 | 2 | 0 | 0 | The hosts compare Enron's scale against FTX and discuss whether Sarbanes-Oxley effectively mitigated fraud or merely pushed it into private markets. | |
| Value Creation vs. Value Capture in Enron's Legacy | 6 | 1 | 0 | 0 | Ben and David wrap up by analyzing value creation versus value capture, noting Enron captured orders of magnitude more value than it ever created. |
Statements from this episode (91)
Enron peaked as the seventh-largest US company by market capitalization
“It was the seventh biggest company in America by market cap.”
Enron won Fortune's Most Innovative Company award six consecutive years
“It was even named Fortune Magazine's most innovative company six years in a row.”
Gilbert: Enron differed from FTX by operating publicly with larger sums
“The biggest difference really is that somehow Enron managed to do it all as a public company in plain daylight the entire time and with much bigger dollar amounts.”
Gilbert: Massive corporate frauds can only reach extreme heights during bull markets
“The thing that occurs to me is this is something that can only occur to this height in a bull market, where there's so much capital saturating so many opportunities that people are willing to go way out on the risk curve looking for returns. Where there's so m…”
Rosenthal: 1973 OPEC shock was far worse than 2022 European energy crisis
“We're talking about the impact of the Russia-Ukraine war on prices in Europe. This was way worse.”
Gilbert: Volcker rate hikes caused low multiples, driving 1980s Wall Street boom
“Of course this was the birth of the Wall Street mania because the super high interest rates from the Volcker era would have led to unbelievably low multiples on any asset you could buy. So of course you've got tons of room to run on investing at Bargain baseme…”
Rosenthal: Natural gas was first sector deregulated under 1978 National Energy Act
“So in 1978, Jimmy Carter signs the National Energy Act, which starts to open back up parts of the energy economy in the U.S. To free market. Competition. And the first big area of the energy industry that deregulates is the natural gas industry.”
Rosenthal: Ken Lay served as Deputy Undersecretary of Energy in 1970s
“So Lay ends up serving as the Deputy Undersecretary of Energy in the Department of the Interior, right as these oil shocks are happening and deregulation is starting to be talked about.”
Rosenthal: Energy trading and financialization did not exist before Ken Lay and Transco
“So before Transco and Lay, the whole idea of like any form of trading or financialization of energy, of oil and gas, didn't really exist because it was all regulated by the government before then.”
Gilbert: Securitization increased financial velocity by packaging and selling off risk
“You could increase the velocity at which a financial company could operate by packaging up risk and selling it to someone else so that you could make new loans off your books or something like that.”
Rosenthal: InterNorth was America's largest pipeline company in 1985
“InterNorth, at this point in time, no Berkshire Hathaway involvement, is the largest pipeline company in America.”
Gilbert: Ken Lay never spoke confrontationally in public settings
“For Ken Lay, I don't think he ever said anything in a public or pseudo-public context that was confrontational or pissed anybody off.”
The Enron logo was graphic designer Paul Rand's final work
“This would be the last logo that the legendary Paul Rand designed before he died.”
Rosenthal: Enron traders racked up nearly $1B in losses in 1987
“So they go on tilt, and they rack up, within the next few months, almost a billion dollars. One B, that's a B, a billion dollars, this is in the late eighties, of trading losses, which that would be enough to bring down the whole firm.”
Rosenthal: Enron reduced reported trading losses to under $100M in 1987
“This time, Lei does fire them, and fortunately for Young and Ron and for Lei, but unfortunately for the rest of the world, this happens early enough in the quarter that the trading floor is able to dig out enough of these losses that they don't have to report …”
Rosenthal: Jeff Skilling and Enron pioneered energy derivatives
“They pioneer this market that would come to be known, and is, I think, and assumes still a very, very large part of the energy market today. Called energy derivatives. Skilling and Enron invent it and pioneer it.”
Rosenthal: Skilling negotiated Enron offer while wife was in labor
“He calls them up to do the final negotiations of the terms of his offer. He calls them up from the hospital where he is with his wife while his wife is in labor with their, I think, second child.”
Skilling made mark-to-market accounting a mandatory condition for joining Enron
“It was that Jeff Skilling insisted that in order to join Enron and start this new division, Ken Lay and the board had to agree to use mark-to-market accounting.”
Gilbert: Enron was first non-financial company to use mark-to-market accounting
“But it is worth pointing out that Enron, when they did adopt this, became the very first non-financial company to use this method.”
Rosenthal: Mark-to-market accounting has high abuse potential in operating firms
“Let's just say the potential for a litany of abuse is high. Very, very high. Especially for what is an operating company, not actually a financial firm.”
Enron executive Lou Pai cashed out $250 million to finance his divorce
“He ends up leaving Enron well before the fall, and he sells his stock to finance the divorce for a quarter billion dollars. He makes two hundred and fifty million dollars.”
Rosenthal: Lou Pai became Colorado's second-largest landholder
“So he ends up becoming the second largest landholder in Colorado. He's still, like, a multi-hundred millionaire to this day.”
Rosenthal: Pre-SOX accounting allowed deconsolidating SPEs with 3% outside capital
“If you set this up, as long as at least three percent, three, one, two, three percent of the capital in that entity comes from outside investors, you can still have The company itself own 97% of the economics of that entity, and you can remove it from your con…”
Arthur Andersen made $50 million annually from Enron, its biggest client
“Enron became Anderson's biggest client in the world. They were making fifty million dollars a year from Enron, half of which was audit and tax fees and half of which was consulting fees.”
The SEC let Enron recognize 20 years of future cash flows immediately
“The SEC allowed them to go out to 20 years that they could collapse into today revenue.”
Enron's reported revenue surged 7.5x from $13.3 billion to over $100 billion
“And they would have a five year run from 1996 to 2001, during which revenues grew 7.5 X during those five years. They went from 13.3 billion in 1996 To over a hundred billion in the year 2000, and every year during that period from 96 through 2001, the company…”
Enron Strategy Shifted Finance From Cost Center to Profit Engine
“So when skilling gets elevated to number two and fast out to CFO the company, they start articulating as the company strategy that the finance department is going to go from being this shared resource cost center to a profit generating division of the company.”
Gilbert: Enron delayed releasing balance sheets and cash flow statements after earnings calls
“On their earnings calls, they are releasing a profit and loss statement, and then, like, a little, a few weeks later, coming out with a balance sheet and a cash flow statement.”
Rosenthal: Fastow named Enron's LJM Capital after his wife and children
“What does LJM stand for? It stands for Leah, Jeffrey, and Matthew, which are the names of his wife and kids.”
Gilbert: Skilling deliberately avoided signing off on Fastow's LJM partnership documents
“There are documents that surface that have a variety of signatures on them, but not skillings. He very intentionally was like I'm not actually gonna sign off on this, but it's kind of good for Enron that it happens, so I'm gonna let it keep happening.”
Enron CFO Andrew Fastow won CFO Magazine's 1999 capital structure award
“He ends up not winning, but he does get a special award from CFO magazine for CFO excellence in the category of capital structure management.”
Fastow planned to leave Enron to run billion-dollar LJM3 fund
“He actually had, LJM III was in the works to be a billion dollar fund, and if that came together, he was just gonna peace out and go do that.”
Michael Kopper funneled Chewco proceeds to Andrew Fastow's wife Leah
“So Copper starts cutting checks from all the money they're making, that Dodson is making. Copper starts cutting checks to Leah Fastow, Andy's wife.”
Rosenthal: Enron was a key player in California blackouts
“They become a key player in the total disaster that is the California blackouts.”
Enron's 'Death Star' scheme exploited imaginary transmission schedules for profit
“Well, it was this experiment where Enron filed an imaginary transmission schedule in order to get paid to alleviate congestion that didn't really exist.”
Rosenthal: California energy crisis was the primary reason Gray Davis was recalled
“I mean, this was one of, if not the major reason that California Governor Gray Davis gets recalled, and then Arnold Schwarzenegger gets elected governor.”
Enron staged a fake, bustling trading floor in 1997 to deceive analysts
“The war room had been rapidly fitted out explicitly to impress the analysts. Though EES was just then gearing up, Skilling and Pai had staged it all to convince the visitors that things were really hopping. On the day the analysts arrived, the room was filled …”
Enron booked $100 million in day-one revenue for an unlaunched Blockbuster partnership
“Oh, the service never launched. But of course, with Enron's Mark to Market, they booked over a hundred million dollars in revenue on day one for it, and then they offloaded the project to a special purpose entity.”
Gilbert: Enron Recognized More Revenue by Terminating Blockbuster Exclusivity Deal
“So that creates a huge amount of future value for Enron, the company, their shareholders, and so they literally recognized revenue even bigger than the Blockbuster deal after the lack of Blockbuster deal.”
Gilbert: EnronOnline Launched in November 1999 as Counterparty to Every Trade
“In November of 99, they launched something called Enron Online, and what this is, is it allows all of Enron's counterparties to trade with them electronically. So they stand up and exchange, like an exchange you can access through a web browser, much like FTX,…”
Gilbert: Fastow Avoided Disclosing LJM Partnership Compensation for Five Years
“Fastow went five years without having to disclose how much compensation he was getting from the LJM partnerships.”
Rosenthal: Skilling Was the Only Enron Executive Who Did Not Plead the Fifth
“He's the only one who doesn't end up pleading the fifth. Like, he defends himself to the end.”
Gilbert: Skilling Negotiated $20M Payout if Not Named Enron CEO by 2000
“He managed to convince Lay that He should get twenty million dollars in cash if he was not made CEO of Enron by the end of 2000.”
Gilbert: Reporters rely on short sellers due to aligned investigative incentives
“Reporters love getting tips from short sellers, because short sellers have a massive financial incentive to go and investigate and figure out what companies are going to fail, and that's a really good where there's smoke, there's fire for reporters.”
Rosenthal: McLean's 2001 Fortune story questioned Enron without alleging fraud
“It's not that bad of an article from Enron's perspective. Like, the biggest question it raises is not one of fraud. It's exactly what you said, Ben. It's like, Enron is a black box. Nobody can figure out what's going on here. But there's no accusations of frau…”
Rosenthal: High reported earnings with negative cash flow indicates potential fraud
“If there's very high revenue growth, very high reported earnings and profit on the income statement, and there is low return on invested capital and poor free cash flow dynamics, probably your radar screen should be going off.”
Enron stock dropped from over $90 to the $40s by spring 2001
“The Enron stock starts falling from the all-time high in the fall of the previous year, just above 90 dollars a share, falls down into the forties. So, like, pretty bad. It's lost, like, over half its value.”
Kenneth Lay concealed massive stock dumps by repaying Enron loans with equity
“But the way he repaid them was he took cash loans from Enron. So Enron loaned him cash. What a merry-go-round. And Ken backed his collateral for that cash that he ended up then repaying the loans to Enron with, Was the Enron stock that he originally had taken …”
Rosenthal: Lay Sold $300M and Skilling Sold $200M in Enron Shares
“All told, I think Lay sells about three hundred million dollars worth of Enron stock via these transactions. Skilling sells about two hundred million, and Fastow and a bunch of the other executives sell a whole bunch too.”
Gilbert: Fastow Made $60M from LJM Partnerships, Exceeding His Enron Comp
“And Fastow actually makes sixty million dollars from the LJM partnerships, from fees, carry, and selling partnership interests. So he actually makes more from the LJMs Than I think he does in total comp at Enron ever.”
Fastow revealed Enron actually held $34 billion in debt, not $12.8 billion
“So he comes back to Lay and the board and says, our actual obligations are thirty four billion dollars, which the debt on the balance sheet was 12.8 billion dollars.”
Enron's overnight commercial paper failed to turn over on September 12, 2001
“On September 12th, Enron's commercial paper doesn't turn over.
Nobody's there to buy it.”
Rosenthal: Enron would have collapsed immediately without 9/11 market distraction
“Now, if this were not September 12th, 2001, that would have been game over for Enron, like right there.
That would have been the end.
But everybody's a little distracted.”
Arthur Andersen instructed Houston team to destroy Enron documents on October 12
“So Arthur Anderson Legal on October 12th sends an email to the Houston office.
God, this email.
Literally directing them in writing in an email to start destroying any and all non-finalized documents that are related to Enron, either digital or physical, quote…”
Arthur Andersen shredded one ton of Enron documents every day for weeks
“They are shredding one ton of paper every single day.
That's the maximum capacity.
This goes on for weeks.
Dozens of tons of paper that they shred of documents related to Enron.”
SEC revoked Arthur Andersen's CPA license in mid-2002, ending 85,000-person firm
“And as a result of that, the SEC in 2002, middle of 2002 revokes Anderson's CPA license.
So literally bars them from.
Oh, I didn't realize that.
Okay.
They had already started to lose tons of clients because, shocker, Anderson was also the auditor of WorldCom,…”
Enron reported a $638M loss and $1.2B equity restatement in October 2001
“On October 16th, Ben, like you were saying, Enron reports earnings. They announced six hundred and thirty eight million dollars of losses for like the first time on their income statement. And they say they have to do a restatement of shareholder equity and re…”
Enron's Raptor hedges were collateralized by Enron's own stock
“The Raptors, I believe, were hedges, intended to be hedges on some of Enron's investments, but the actual mechanism and the underlying collateral that they used for the hedge was Enron's stock itself. So they became this, like, massively toxic, like, they didn…”
Enron's CFO didn't track the company's total debt, cash, or maturity schedules
“McMahon learns that not only did Fastow not know how much debt Enron as an organization had, he also didn't know how much cash they had, and he also didn't know the maturity schedule of the debt, so he didn't know And thus, nobody in finance knew the company t…”
Gilbert: Banks refused new debt lines before Enron tapped revolving credit
“They actually went and asked the banks, hey, can we get new debt lines with you, and every single one said no, and so they pulled the credit lines, which the banks have no option. It's already negotiated and signed.”
Gilbert: Moody's was complicit and failed to properly underwrite Enron
“Moody's, they've been complicit the whole time and just shows you just how much of a racket this thing is. No one has been actually underwriting this company to decide if they're credit worthy or not.”
Rosenthal: Dynegy agreed to acquire Enron for $8B and lent $1.5B
“Dyna G's gonna Acquire Enron for eight billion dollars, an all stock deal, no cash, but Enron of course needs more cash to survive until the deal can close and Dynergy can complete its due diligence. So Dynergy lends one and a half billion dollars to Enron in …”
Ken Lay's wife dumped 500,000 shares minutes before Enron's bailout deal collapsed
“At 10:20 a.m., 10 minutes before the news comes out, Ken Lay's wife sells 500,000 shares of Enron stock that the Kenan whatever her name is, that the Lay Family Foundation held.”
Gilbert: Dynegy Term Sheet Included a $60M Cash Bonus for Ken Lay
“As a part of the Dyna-G term sheet, upon completion of the deal, Ken Lay just got sixty million dollars in cash as, like, a bonus.”
Rosenthal: Enron's December 2001 Bankruptcy Was the Largest in U.S. History
“On December second, indeed, just a few days later, Enron files for chapter 11 bankruptcy. At the time, the largest bankruptcy in U.S. History.”
Gilbert: Lehman Had Hundreds of Billions in Assets vs. Enron's $63B
“Lehman is the largest. It's the only one in the, like, high hundreds of billions, whereas Enron had sixty-three billion in assets before filing.”
Gilbert: John Ray recovered $13B (36¢/$1) for Enron's creditors
“He was able to get thirteen billion out to creditors, which is about 36 cents on the dollar. Much better than the 17 cents that Stephen Cooper, that his plan called for.”
Enron's audit committee chair was the dean of Stanford's business school
“The chair of the audit committee of Enron's board during all the years that all this was going on was the dean of Stanford Business School, who was an accounting professor.”
Gilbert: John Ray restructured Fruit of the Loom before Berkshire sale
“After bankruptcy, after John Ray restructured, and it came out of Chapter 11, it was sold to Berkshire Hathaway. Fruit of the loom.”
Rosenthal: Bush's parents flew on Enron jet to 2001 presidential inauguration
“The Bush family was very close. So close, in fact, that when W was inaugurated president, George H.W. And Barbara Bush traveled from Houston to Washington for the inauguration with Lay on the Enron corporate jet.”
Gilbert: Sarbanes-Oxley shifted corporate fraud from public to private markets
“The result of Sarbanes-Oxley being stay private longer, that it's much more likely that fraud now happens in the private market than the public market, and that is basically what we saw with Theranos, with FTX.”
Rosenthal: Sarbanes-Oxley provision was used against Jan. 6 Capitol defendants
“One of the provisions of Sarbanes-Oxley was actually used in prosecuting capital rioters for the January six riots.”
Rosenthal: Skilling and Lay Convicted on Multiple Fraud Counts in May 2006
“So, May, 2006, a jury finally convicts Skilling of 19 out of 28 counts of wire fraud and securities fraud, and Lay gets convicted on six counts of securities fraud.”
Rosenthal: Skilling Served 12 Years Before February 2019 Federal Release
“The sentence gets reduced to 14 years. Skilling ends up serving 12 in total. And is released from federal custody in February, 2019.”
Jeff Skilling founded a new energy trading company in 2020 after prison
“And in twenty-twenty, Jeff Skilling founded a new energy trading company based in Texas called Veld LLC, rumored to be working on the venture with Lou Pie.”
Rosenthal: Berkshire Hathaway Energy acquired Enron's former pipeline assets from Dynegy
“Who ends up buying the pipelines but Berkshire Hathaway Energy.”
Rosenthal: Enron bank settlements totaled $7.2B, paying $6.79 per common share
“Well, in September, The whole suite of settlements with a whole variety of banks, JP Morgan, Citigroup, various others, come in for a total of 7.2 billion dollars coming into this rotting carcass of Enron, which results in a distribution of six dollars and 79 …”
Rosenthal: Buying Enron stock at 61 cents yielded over a 10x return
“So if you had bought Enron equity in those days between the collapsing of the Dinergy merger And the bankruptcy, if you had bought for 61 cents, you would have had over a ten-x return if you were willing to hang on for seven years.”
Ben Gilbert: John Arnold founded top-performing hedge fund Centaurus after Enron
“John Arnold went on to start the firm Centaurus, which is one of the highest-performing hedge funds ever.”
Rosenthal: John Arnold got Enron's largest non-executive bonus of $8M
“Yeah, he got the largest cash bonus that Enron ever gave to anybody who wasn't a senior executive of, I think, eight million dollars.”
Ben Gilbert: Kinder Morgan is worth $40B and Richard Kinder $8B
“It was an energy pipeline, and today, Kinder Morgan is a forty billion dollar company, and Kinder Is a billionaire. He's worth like eight billion dollars.”
Ben Gilbert: GE's wind energy business was acquired from Enron
“GE bought the wind business from Enron, and I believe even today is sort of the cornerstone of their wind energy business.”
Gilbert: Enron Online could have achieved Citadel-like information advantage
“I think that Enron Online was a real way that they could have gotten real market power. I'm trying to think what that is. It's probably cornered resource. They would have had better access to information about the market than anyone else. It's almost like the …”
Rosenthal: Lay and Skilling were worse than Fastow in Enron's fraud
“Like I said, it's not like I still feel a little bit icky about, like, promoting what Fastow is saying now, but I think my conclusion at the end of this is Lay and Skilling truly were the worst, and the government was right to cut plea deals with everybody els…”
Enron left behind approximately $1 trillion in claims across 30,000 creditors
“Enron left behind a trillion dollars of claims to 30,000 creditors.”
Gilbert: Enron's Rebecca Mark Sold $83M in Stock Without Charges
“She sold about eighty-three million dollars of stock. She actually got out early enough, and she was sort of cast out by the male executives at the top in a way where she was actually never accused of any wrongdoing and never really a part of the prosecution o…”
Rosenthal: Companies Stayed Private for Opacity and Profit, Not Sarbox
“Sarbanes actually raised the cost and complexity of being a public company. No doubt. I think, though, probably not as much as the stay private longer proponents were saying. And this might be related to what you're saying. I suspect, again, to the incentives …”
Rosenthal: Sarbanes-Oxley Likely Succeeded in Protecting Public Shareholders
“Sarbanes actually probably has accomplished its goals pretty well, which is protect The broader American public and investing public has shareholders in public companies from fraud.”
Gilbert: Enron soured when derivatives trading became the end goal
“I think as soon as the business became the derivatives trading as an end, rather than as like a means of hedging, or as a means of cash flow stabilization and price predictability, I think that's sort of where basically everything after that was bad.”