Thursday, December 29, 2005
In the run-up to the Enron conspiracy trial -- now delayed for two weeks after the plea agreement of Richard Causey -- U.S. District Judge Sim Lake is clearing out motions to allow the prosecution to proceed. In the latest decision, Judge Lake denied Jeffrey Skilling's motion to dismiss ten insider trading charges (counts 42-51 of the indictment here) for failure to identify the material non-public information on which he is alleged to have traded in selling approximately $62 million worth of Enron shares in 2000 and 2001. While the specific charges are simply a recitation of Section 10(b) and Rule 10b-5, along with the dates and amounts of the trades, the indictment goes into significant detail on specific knowledge Skilling is alleged to have had regarding Enron and his failure to disclose or misrepresentations about the company. Unlike the recent indictment of former Qwest CEO Joseph Nacchio on similar insider trading charges also involving sales based on knowledge of the company's prospects, the Enron indictment does identify specific types of information and its dissemination on particular dates, primarily analyst conference calls and other public disclosures of the company. While the government will have to "connect the dots" at trial in trying to convince the jury that Skilling knew the market did not adequately reflect all the information available to him, the indictment does not contain the type of vague allegations that it does in the case against Nacchio. Look for Judge Lake to issue additional rulings on remaining motions as we get closer to Jan. 30, the new trial date. An AP story (here) discusses the judge's decision to deny the motion to dismiss. (ph)
UPDATE: Judge Lake's opinion denying the motion to dismiss is available on Findlaw here.