31 August 2004 LAWFUEL – Best for law, law news, legal news, legal research Hannon To Pay $3.2 Million; Agrees To Cooperate In Ongoing Investigation
The Securities and Exchange Commission (“Commission”) today settled civil fraud charges filed against Kevin P. Hannon, former Chief Operating Officer of Enron Broadband Services (“EBS”). The complaint, filed on May 1, 2003 in the U.S. District Court in Houston, charged Hannon and other executives from EBS with fraud and insider trading. Without admitting or denying the allegations in the Commission’s complaint, Hannon has agreed to be enjoined permanently from violating Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5, and to be barred permanently from acting as an officer or director of a public company. The Commission settled its action in coordination with the Justice Department’s Enron Task Force, which entered into a plea agreement with Hannon on related criminal charges. In resolving the parallel civil and criminal proceedings, Hannon has agreed to pay disgorgement and a civil penalty totaling $3.2 million and to cooperate with the government’s continuing investigation.
As alleged in the Commission’s complaint, Hannon and other EBS executives engaged in a wide-ranging fraudulent scheme to, among other things, inflate the value of Enron stock through a series of false and misleading statements and the omission of material information in such public statements about the technology, financial condition, performance and value of EBS. The false and misleading statements by Hannon and others were made in press releases over a two-year period as well as in presentations and statements made at Enron’s annual analyst conferences in January 2000 and 2001. As a result of the false statements, Enron’s stock price was artificially inflated. Hannon then sold large amounts of Enron stock at the inflated levels, at a time when he knew that the statements were false and misleading and when he was in possession of material non-public information concerning the true status of EBS’ technology and commercial success.
The Commission acknowledges the assistance of the Enron Task Force. The Commission’s investigation is continuing. For additional information see