A former prosecutor looks at Enron and Bear

Writing in the WSJ, Robert Mintz, now gone over to the other side, says of the Bear hedge fund indictments,

[t]his is not Enron, where executives were charged and ultimately convicted of cooking the books* * * [L]ike all indictments, [it] benefits from the wisdom of 20/20 hindsight. We all know how the story ends, and it isn't pretty. But these two hedge fund managers were not alone in reaping huge profits for years from the subprime market. Nor were they alone in understanding the fundamentally risky nature of investments that relied so heavily on the misguided expectation of perpetual real estate appreciation. * * * Lying to the investing public is a serious breach that cannot be condoned if we are to maintain the integrity of our markets * * * But it is all too tempting for the government to ride in after a colossal collapse that many should have seen coming and look for someone to blame, when clearly there's plenty of blame to go around.

Ah, but it is Enron. 

Comments

[Kevin]

It's the "Enron" of Skilling, Lay, the Natwest guys, et al. It isn't the Enron of Fastow, Glisan, and Kopper. What a shame that so few are willing to articulate the difference.

[Ed]

If we accept that deterrance is a legitimate purpose of criminal prosecutions, then throwing Cioffi and Tannin in jail for a few months (assuming their guilt is indeed proven) seems entirely reasonable. It may not be "fair" that they get prosecuted criminally while some other (perhaps unknown) individuals in other circumstances do not. But who ever said life is "fair." Prosecutors have to do what they can, and make clear that there are indeed real personal risks for lying to investors, even rich/sophisticated investors.