Reply #2: More - the Gramms and UBS Warburg [View All]

[Zan_of_Texas]

Without Wendy and Phil Gramm to run interference for Enron and create a giant regulatory hole for them to operate without supervision in, arguably Enron would have been unable to create such a giant scam. And, where does Phil Gramm end up? UBS.

January 14, 1993: six days before Bill Clinton was inaugurated and she would lose her seat, Wendy Gramm, chair, and the rest of the Commodity Futures Trading Commission voted to remove oversight of energy commodity contracts and swaps. Thus, they created a hole in regulation big enough to, well, drive Enron through. This was a crucial ruling in creating room for them to do their energy trading, which they later claimed earned them a large portion of their revenues. Dr. Gramm had been appointed to the CFTC by Reagan.

Late February, 1993: Just weeks after the vote, Ken Lay appoints Wendy Gramm to serve on Enron's board of directors, a part-time position for which she is eventually paid as much as $50,000 annually, plus tens of thousands in stock options and other cash benefits. Gramm, who holds a doctorate in economics from Northwestern University, would serve on Enron's crucial audit committee.

December 15, 2000 - Senator Phil Gramm co-sponsors the Commodity Futures Modernization Act, which deregulates energy futures. The bill does not undergo the usual committee hearings and preliminary votes, and is immediately attached as a rider to an 11,000-page appropriations bill. Two Republicans from Texas, Reps. Dick Armey and Tom DeLay, are instrumental in pushing the legislation through the House. Tom DeLay's wife, Christine, works for a lobbying firm, Alexander Strategies, that Enron has hired for up to $200,000 a year to push energy deregulation. Passed after heavy lobbying, the Act codifies and expands CFTC's rule exempting energy derivative contracts from regulation. It also ensures that EnronOnline – the company's online energy trading forum – is not regulated.

Aug. 14, 2001 – Chief Executive Jeffrey Skilling quits Enron, citing personal reasons. Ken Lay returns to the position of chief executive officer. Lay says, "Absolutely no accounting issue, no trading issue, no reserve issue, no previously unknown problem issues" are behind the departure. Lay writes an email message to his employee/stockholders: "Our performance has never been stronger; our business model has never been more robust. ...We have the finest organization in American business today."

Aug. 15, 2001 - Enron vice president for corporate development, Sherron Watkins, sends a brief anonymous letter warning Lay of "a veil of secrecy" around off-book partnerships and predicts the company will "implode in a wave of accounting scandals." She will meet with Lay later that month to discuss her concerns.

Aug. 21, 2001 - Since November 2000, Ken Lay has been using a new rule that allows options to be exercised and sold regularly year-round as long as it is done on a plan approved by securities regulators. Almost every workday, Lay exercised a fixed number of options and sold the same amount of stock on the market, netting the difference. The usual take per month is $4 to $7 million, depending on the stock price. However, in June 2001, as the California AG announced he would investigate energy prices, Lay had a flurry of stock sales netting an extra $20 million.

In August 2001, Ken Lay begins his second flurry of sales. He uses Form 5, which will not be reported until the following February, thus concealing the activity from the markets.

August 21 he sells 110,706 shares @ $36.25
August 23 . . . 108,254 . . . @ $36.95
August 24 . . . 110,041 . . . @$36.35
August 30 . . . 112,706 . . . @$35.50
Sept. 4 . . . . 114,346 . . . @$35.00

Over fifteen days, Ken Lay sells over half a million shares (556,053) raising $20 million.

Aug. 28, 2001 - The SEC quietly opened an investigation into Enron's off-the-books partnerships.

Sept. 4 - Sen. Gramm announces he will not seek re-election to the Senate.

Sept. 6-7 - An unusual number of put options are bought for United Airlines and American Airlines.

Sept. 11, 2001 - Four planes crash into the World Trade Centers, on or near the Pentagon, and a Pennsylvania field.

Sept. 26, 2001 - Lay urged employees to buy more stock, calling it "an incredible bargain" and touted the energy giant's overall financial picture. "Our third quarter is looking great."

Dec. 2, 2001 - Enron files for Chapter 11 bankruptcy protection. At the time, it's the largest bankruptcy filing ever.

Jan. 11, 2002 - The final two bidders for Enron's trading unit are Citibank and Swiss investment bank UBS Warburg, and the winner turns out to be UBS. But Enron irked creditors by failing to release the deal's terms, except to say it is exceptionally complex. Enron's trading business was the company's largest revenue generator, accounting for about 80 percent of the firm's profits. With 800 trading desks around the world, Enron's traders once dominated the oil, natural gas and electric power markets, while also swapping a host of other commodities. In 2000, the system conducted as many as 548,000 trades valued at more than $330 billion, according to Enron. However, later, it appeared that the way Enron accounted for its trades, booking the entire value of the trade rather than just the profit, made the revenues look much larger than they were.

April 10, 2002 - Senator Phil Gramm fights off an attempt to regulate energy derivatives trading.

Oct. 7, 2002 - Senator Gramm announces he will become a Vice Chairman at UBS, and he declines to announce his new salary.