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Today In Enron History

When Andy Fastow pleaded guilty, he stated as an example of how the Raptors were improperly used involved a hedge of an investment called Avici. He stated:

I and others, including Enron’s Chief Accounting Officer, agreed to date the AVICI hedge August 3, 2000 in order to locking in the value of AVICI (a volatile stock) at its all-time high and not incur the known and quantifiable loss from the AVICI stock having declined after August 3, 2000.

An intriguing contradiction: it is legal to back-date stock options as part as compensation, yet apparently backdating documents which result in basically the same outcome is illegal.

In any case, the Avici stock on that date was $162.50. If they’d used September 30 as the reporting date, Enron would have reported a loss of $65,500,000.

Cara Ellison

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