Blame it on the “vultures.” That was part of the defense outlined by attorneys for Ken Lay and Jeff Skilling during opening statements of their trial Tuesday.

Enron

Blame it on the “vultures.” That was part of the defense outlined by attorneys for Ken Lay and Jeff Skilling during opening statements of their trial Tuesday.The vultures in this case are short sellers. To hear defense attorney Mike Ramsey tell it, short sellers destroyed Enron for a quick profit.

The short sellers themselves, of course, see it differently.

“In the Enron drama, one of the few players who were wearing white hats were the short sellers,” says Jim Chanos, president of New York-based Kynikos Associates. Chanos began selling Enron’s stock short in November 2000 after he scoured its financials and grew suspicious of its low rate of return on capital.

So, who are these shadowy villains who lurk in the recesses of the market?

In simple terms, they’re contrarians. They invest in a stock because they believe it will fall. They borrow shares and sell them at the current market price. They later buy new shares to replace the ones they borrowed, hoping the price has fallen in the interim. The difference between the borrowed price and the payback price is their profit.

They are, in other words, people who make money betting against the inherent optimism of business. As such, they are not well liked by executives and even many other investors. That makes them easy scapegoats for management failure.

It was another short seller, Richard Grubman of Highfields Capital Management, who drew the infamous expletive from Jeff Skilling during a conference call in April 2001. That call was replayed in court on Thursday afternoon.


One of First Convictions in Country for Exporting National Security …

One of First Convictions in Country for Exporting National Security Items to Iran

SAN JOSE – LAWFUEL – Law News Network – United States Attorney Kevin V. Ryan announced that Super Micro Computer Inc. pleaded guilty yesterday to a felony charge of unlawfully exporting computer components to Iran in 2001 and 2002. Export of the computer components was banned at the time for reasons of national security under export commodity control number 4A003.b. This guilty plea is the result of an investigation by agents of the Bureau of Industry and Security, Office of Export Enforcement, of the U.S. Department of Commerce, which regulates exports, and Internal Revenue Service – Criminal Investigation.

Super Micro, headquartered in San Jose, Calif., was charged in an information filed by the U.S. Attorney’s Office on September 1, 2006. The company was charged with one count of knowingly exporting items subject to export regulations without obtaining a license, in violation of Title 50, United States Code, section 1705(b). Under the terms of the plea agreement, the company agreed to plead guilty and pay a $150,000 fine. Pursuant to the agreement, Judge Ronald M. Whyte imposed the sentence on the same day the company pleaded guilty. According to the plea agreement, as a result of the investigation the company implemented a new export control program in February 2004. Since the initiation of that program, the government has been monitoring Super Micro’s exports and has found no evidence of further export violations. Remedial actions taken by the company were taken into account for sentencing purposes.

In pleading guilty, the company admitted that between December 28, 2001, and January 29, 2002, the company sold 300 of the company’s P4SBA+ Motherboards to a company named Super Net in Dubai, United Arab Emirates, knowing that the items were to be transhipped to Iran. Super Net paid $27,600 for the items. At the time of the export the items were controlled for reasons of national security, and exporting them to Iran without a license was illegal. The motherboards at issue are no longer controlled for export.

According to Department of Commerce records, this case is one of the first criminal convictions in the nation for exporting items controlled for national security reasons to Iran.

Gary G. Fry is the Assistant U.S. Attorney who prosecuted the case with the assistance of Legal Technician Tracey Andersen.

Further Information:

Case #: CR 06-00597 RMW

A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.

Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.

Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.

All press inquiries to the U.S. Attorney’s Office should be directed to Luke Macaulay at (415) 436-6757 or by email at Luke.Macaulay@usdoj.gov.

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