Banks, the Forgotten (?) Partners in Fraud

64 Pages Posted: 25 Feb 2005

See all articles by Hillary A. Sale

Hillary A. Sale

Georgetown University Law Center; Georgetown University - Robert Emmett McDonough School of Business

Date Written: January 2005


This article examines the role of the banks in the Enron fiasco. By documenting the emails and other internal communications at the banks, the article provides a thorough description of the complicit role the banks played. Further, the article describes the SEC settlements designed to address the banks' wrongdoing and raises questions about whether we yet know the extent of their involvement or have achieved a fair or efficient settlement. For example, the article details that none of the documents provide a thorough descriptions of the amount of the banks profit on their roles in the Enron deals. As a result, we cannot evaluate whether the SEC settlements are appropriate. Indeed, the settlement documents are so unavailing, that it is impossible to know whether the SEC has lived up to its prescribed role of defending the investors. This Article examines the SEC's failure to provide investors with the requisite information and proposes that the SEC take action to improve the process, offering suggestions to help it do so that are consistent with the disclosure-based focus of the U.S. securities regime and using recent amendments to the Tunney Act's antitrust consent-judgment process as a model.

Keywords: investment banks, Enron, fraud, securities fraud, securities disclosure, banking, Securities and Exchange Commission, settlement

JEL Classification: G19, G39, K29, L10

Suggested Citation

Sale, Hillary A., Banks, the Forgotten (?) Partners in Fraud (January 2005). U Iowa Legal Studies Research Paper No. 05-09. Available at SSRN: or

Hillary A. Sale (Contact Author)

Georgetown University Law Center ( email )

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

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