Summary

Several financial analysts from various major institutions testified before the Senate Governmental Affairs Committee today on the collapse of Enron Senators heard testimony on the role financial analysts played in the collapse, as well as suggestions on how to keep this from happening again

Source CONUS Archive
Record ID 272105
Story Slug ENRON HEARING / FINANCIAL ANALYSTS (2002)
Location WASHINGTON, DC
Format TVD
Date 02/27/2002
Archive Time 00:10
TRT 4:45
Supers 1) Senator Joe Lieberman / D-CT 2) Senator Carl Levin / D-MI 3) Senator Robert Bennett / R-UT 4) Anatol Feygin / JP Morgan Chase 5) Curt Launer / Managing Director, Equity Research Group, Credit Suisse First Boston 6) Howard Schilit, PhD, CPA / President and Founder, Center for Financial Research and Analysis, Inc
Video Description everyone speaking from desks, various wide shots of room
Description Several financial analysts from various major institutions testified before the Senate Governmental Affairs Committee today on the collapse of Enron Senators heard testimony on the role financial analysts played in the collapse, as well as suggestions on how to keep this from happening again
Script (SUGGESTED TRANSCRIPT OF AUDIO) 00:00 To crumble Why were the analysts blinded to the company's deceit and disintegration, and how can we prevent similar failures in the future? Those are the crucial questions we're going to ask today, and they're crucial because the Enron earthquake has left millions of Americans worrying that their stocks are standing on shaky ground Enron Enron's ad campaign, or one of them, as some may remember, was ask why It now seems clear that too many analysts failed to ask why before they said buy, and often when they did ask why, but didn't get a straight answer from Enron's executives They went right on touting the stock 00:47 waiting Most 00:48 financial analysts wear two hats One is the allegedly independent analyst of publicly traded companies, providing us their educated and experienced insight on a company's future based on publicly available information The other hat is that of the sophisticated insider investment banker analyst who helps his or her company attract and carry out investment banking business wrong 01:17 And there is no way that Congress or any other legislative body in the world can prevent people from being wrong You don't have to be dishonest You don't have to be engaged in fraud You can make a mistake And all of us do, all of us have and all of us will continue to do that interest 01:42 or sale of that company's stock Some financial analysts have pointed out to the committee that information provided by Enron was incomplete or even inaccurate Analysts would ask questions but be brushed off or even lied to But that raises the issue of Why didn't these analysts press for answers or see the lack of cooperation and the lack of information as warning signs 02:10 straight line is taking giving a numerical value to strong, Sell, sell, hold, buy and strong buy, they call me Consistent 02:24 with JP Morgan's policies of analyst independence in analyzing the companies, I follow I rely on publicly available information My sources of information include the audited financial statements of the companies, their filings with the Securities and Exchange Commission and other regulatory bodies, annual reports, presentations to analysts, the accuracy of this publicly available information, as senators tourists and voting pointed out, is absolutely essential to the accuracy of the resulting recommendation 02:55 My second point is that inaccuracies and lack of information in Enron's financial reporting affected my conclusions and ratings on Enron 03:03 I did want to comment on, 03:07 were there any signs in any of the public filings that there were problems at Enron? A very logical question I mean, everybody's saying they just they hid from us, they lied to us, they committed a fraud Did you read the public filings that were published at the SEC? I spent an hour of my time last night going through every quarterly filing proxy, no more than an hour, and I have three pages of warnings, words like non cash sales, words like $1 billion of related party revenue These were all from last year This was beginning in March of 2000 every single quarter There was a little blurb looking at the reported profits for one quarter, 338,000,260 4 million Of that, a pretty material amount, represent earnings from unconsolidated affiliates, more than two thirds of the earnings I mean, it gets on and on and on corporations, snippets of information, but the point is this, I mean, I'm heartbroken that I was not covering this company when I could have done some good, but for any analyst to say there were no warning signs in the public filings, they could not have read the same public filings that I did, your disappointment 04:35 is nothing compared to a lot of other people who wish that you were following it Yeah Did
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Keywords

Business
economics
fraud
white collar crime
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