University of Iowa News Release
May 25, 2006
Law Professor Sale Says Enron Verdict Sends Warning
Thursday's conviction of two former top Enron executives should send a message to business leaders that they cannot break the law and expect to get away with it, said University of Iowa law professor Hillary Sale.
"Sending people to prison is the best deterrent and this conviction sends a big signal that if someone violates securities laws, they will go to jail," said Sale, after a Houston jury convicted former Enron CEOs Jeffrey Skilling and Ken Lay of a host of securities fraud charges. "Enron is the poster child for the bad corporate behavior of the 1990s and this verdict verifies that corporate leaders were behaving badly."
Sale is an expert in securities fraud law and has performed extensive research on laws passed in the wake of the collapse of Enron and other corporations in the early 2000s. Enron, a Houston-based energy company, became one of the ten largest companies the United States under Lay's and Skilling's leadership, eventually employing more than 11,000 workers before it was brought down by scandal in the fall of 2001 and declared bankruptcy.
Sale said she wasn't surprised by the verdicts because Skilling and Lay had little legal defense to offer.
"Their best attempt at a defense was to put the defendants on the stand, but both Skilling and Lay turned out to be bad witnesses," said Sale. The two defendants were testy and argumentative during their several days on the stand in April and May, at times arguing even with their own defense attorneys.
Sale said the verdict was also a vindication for the media, who first began to ask questions about Enron's complex financial structure with stories in such publications as Fortune and the Wall Street Journal.
"Part of their defense was to blame the media and say it was exaggerated media coverage of the company's problems that led to the company's bankruptcy," said Sale.
STORY SOURCE: University of Iowa News Service, 300 Plaza Centre One, Suite 371, Iowa City, Iowa 52242-2500.
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