Civil Charges in Corporate Scandals
Released: 2006-02-23T00:00:00

Introduction

The collapse of Enron Corp. in late 2001 marked the beginning of a long series of scandalsinvolving major U.S. corporations. This report lists civil suits filed by federal regulatory agenciescharging individuals and corporations with violations related to these scandals. The list is limitedto companies and their officers or employees that fit within the Enron pattern. That is, these arecases that allege one or more of the following: irregular accounting and auditing, managementself-dealing, conflicts of interest between firms and financial advisors (or Wall Street firms and theircustomers), and manipulation or abusive trading in energy markets. Small "garden variety" examplesof securities or accounting fraud are excluded.

A number of these cases, noted in the table, have also resulted in criminal indictments, somefollowed by guilty pleas. These post-Enron criminal charges are listed in CRS Report RL31866 , Criminal Charges in Corporate Scandals .

The civil cases listed here include only those filed by federal regulatory agencies --principally the Securities and Exchange Commission (SEC), but also a few actions by theCommodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission(FERC). Private lawsuits, such as shareholder derivative actions, are not included, although manyof the companies listed are targets of multiple private suits brought by investors, employees, andothers.

The most common form of resolution of civil cases like these is the consent agreement,whereby the defendant neither admits nor denies any wrongdoing. Despite the formal nonadmissionof guilt, the consent agreement often imposes fines and other sanctions. These are described in thelist.

Descriptions of the charges are mostly drawn from government agency press releases or otherdocuments. These are accessible on the agencies' websites. For example, SEC press releases areavailable at http://www.sec.gov/news/press.shtml , CFTC press releases are available at http://www.cftc.gov/cftc/cftcpressoffice.htm , and FERC's at http://www.ferc.gov/press-room/press-releases.asp . These press releases often contain links to theactual court filings, which provide more detailed descriptions of the cases.

Additional abbreviations used in the following table are NASD (National Association ofSecurities Dealers), NYSE (New York Stock Exchange), and NASAA (North American SecuritiesAdministrators Association).

Table 1. List of Civil Charges Filed by Federal Regulators in Corporate Scandals

Source: The government agencies' press releases are accessible on their websites: SEC at http://www.sec.gov/news/press.shtml , CFTC at http://www.cftc.gov/cftc/cftcpressoffice.htm and FERC at http://www.ferc.gov/press-room/press-releases.asp .

Abbreviations: NASD (National Association of Securities Dealers), NYSE (New York Stock Exchange), and NASAA (North American SecuritiesAdministrators Association)

a. Cases also resulted in criminal indictments, some followed by guilty pleas.

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