Ex-Enron CEO Skilling launching new digital marketplace for oil investors | Hacker News Reader

Ex-Enron CEO Skilling launching new digital marketplace for oil investors

uk.reuters.com

58 pointshhs58 comments

If you don't know much about Enron's history and ultimate demise I recommend giving "A conspiracy of fools"[0] a read. It's a long one but there's also an excellent audiobook available. It's very detailed, based on countless interviews and very well fact checked. If it wasn't a true story, it'd be pretty unbelievable fiction, the things management got away with.

Also a cautionary tale of tying your financial stability to your employer more than strictly necessary (your salary). Most employees kept all their retirement savings as Enron stock and got burned badly.

If memory doesn't fail me, the book also mentions Skilling starting to come up with plans for his follow-up venture whenever he got out of prison, shortly after being arrested - which I guess has now been published.

[0] https://www.goodreads.com/book/show/29519.Conspiracy_of_Fool...

I’d also recommend The Smartest Guys in the Room (and the documentary based on the book)

[0]: https://www.goodreads.com/book/show/113576.The_Smartest_Guys...

seconded. this doc was amazing.

> However, at least one investor who listened to his presentation was reluctant to invest in the venture because of his Enron past, that person said.

Only one!??!

Throw away the moral discussion of what he did. You can completely ignore it and you still must conclude that his track record is of one of destruction of investor value.

It says at least one, not only one.

Only one confirmed is still low.

This reminds me of the critic’s reply to Gertrude Stein

http://www.openculture.com/2013/06/gertrude_stein_a_snarky_r...

He also only needs one...

The fact that many investors will outright dismiss Skilling based on his track record is exactly what would attract amoral investors. One man's trash is another man's treasure.

One said it out loud.

From his Wikipedia page:

" guilty on one count of conspiracy, guilty on one count of insider trading, guilty on five counts of making false statements to auditors, guilty on twelve counts of securities fraud "

If you invest money with the guy, I think you should go for the package deal and also buy that one bridge they are selling in Brooklyn.

When does one decide to give people second-chances?

Who says everyone gets a second chance?

That kind of attitude assumes you're law-abiding, civic, and righteous enough to never need one. Or you're not one of those people but nonetheless choose to reject second chances (even though there's a risk it will be used against you) in the spirit of self sacrifice for the common good.

Second chance at the same thing he got caught for ?

no one would be bothered for him to become VP / consultant and advising customers like the guy in wolf of Wall Street .

It is completely different when is asking people trust with him money

Giving him a second chance means letting him out of jail, not trusting him immediately with large sums of money when he gets out.

Nobody is forced to invest with him though. It's not like the government is forcing money onto him, people can choose to invest or not.

If you think the legal punishment for securities fraud should include being barred from running investment funds ever again, that is a fair position but it's not part of the law right now and it was not part of his sentence. Petition your local politician and/or run for office yourself if you feel strongly about it and want to change it. He served his sentence and when he got out he went to get a job in the field he's most experienced in. Can't really blame him for that.

Some would argue that he made enough of his first chance to merit being passed over in the "second chance" lottery.

His second chance is going and living out a quiet existence, maybe volunteering or working on his golf handicap, raising foster puppies, whatever.

Ok, I'll bite: would you give a mass murderer a second chance? The financial/moral cost of Enron was stochastically as bad as that at least.

... or someone who poked out one of your eyes?

I mean you can't just blindly trust this guy.

Second chance in running financial operation? Probably never in this case.

Normal job with little power and little ability to fraud would be fine.

> When does one decide to give people second-chances?

I don't think anyone is denying them a second chance but merely suggesting they probably aren't the safest option to invest your money in due to the immense amount of fraud they got up to.

Fool me once, shame on you...

His second chance is to put groceries on the shelves under close supervision, if he can do it long enough without incident, he can be trained to be a cashier. But in a management position? I'd need 15 years of employment without incident.

Be thankful we can’t look up the worst thing you’ve done in your life on wikipedia as well.

The guy paid his debt to society, let him try to do something positive with his life now.

That attitude is part of the reason why the US has the worst rates of recidivism in the developed world (something like 75% I believe, whereas in northern Europe where they believe in second chances for criminals, it is closer to 25%).

He can be permitted to do something positive with his life while being prohibited from touching investor dollars or holding a position as an officer of a company public or private.

So if I go to jail for robbing a grocery store, I should never be allowed in grocery stores again?

Why let him out of jail at all if you believe he can’t be trusted?

If you robbed a grocery store with a gun, you probably shouldn't be trusted with a gun again.

Grocery stores are an essential service so obviously you can't be banned from all of them. I bet the specific one you robbed bans you for life though.

It depends. Why did you rob the grocery store?

You were hungry?

Your family was hungry?

Your city water supply was toxic enough to impair your mental development?

You fell under some bad influences at an impressionable age?

Now, what are some possible motivations for Jeffrey Skilling's actions at Enron?

Let's list a few, you go first.

To play devil's advocate...

It's a free country, and these people are accredited investors who can make their own choices. This individual already paid the penalty demanded by our society for their actions. It sounds like you are suggesting a lifetime ban would have been a more appropriate penalty, but that would be more of a comment on our justice system. Is it really the job of our justice system to be a nanny state for everyone's past wrongdoings?

(maybe yes, but it's a very slippery slope)

The investors may be responsible for other people's money. There is a principal agent problem here.

Exactly this. Is there going to be recourse when pension or retirement funds are lost? Nope!

If he ended up scamming people again, I wonder if this would be a case of such flagrant disregard for one's fiduciary duty as a fund custodian that investors could actually sue them for breach.

We should not put investor dollars at risk to find out.

> The guy paid his debt to society, let him try to do something positive with his life now.

Yes, the guy who committed some of the most flagrant financial crimes in history as the CEO of an energy exchange deserves a second chance at running an energy exchange the moment he is released from prison.

"The guy paid his debt to society"

I imagine former front line Enron employees who lost big portions of their retirement funds might disagree.

I am inclined to agree with the argument in principle. But were I convicted, I would not be able to find another job in financial services. Trust is gone, no company would want to touch me with a ten foot pole. I guess investing is truly a different world.

As someone who ran a hedge fund, I would be a little surprised if it turned out that people simply gave this a chance like any other investment.

When you do due diligence, especially when investing other people's money, you need to be able to justify your choices. If the investment sours you don't want to be the guy who decided to invest with a convicted criminal. You also want to be doing business with "fit and proper" people, this might even be a term that shows up in various documents as a necessity (eg Premier League has such a test for potential owners). Needless to say a guy with his history isn't fit and proper. In some countries you might even be barred from serving on a board if you got convicted of this sort of thing.

If I were an energy investor, I would be extremely wary of anything Enron's former CEO touches. I'm honestly surprised he's trying to stay in that part of the market or even in finance at all.

This idea has been tried a few times. There's a fairly liquid market for the resale of oil and gas wells already. There is also advanced software packages for analyzing the data. If the angle is exposing retail investors to these assets, it'll go as well as $USO.

Well... The guy knows all about securitizing and trading energy.

That said, do you really want to be buying assets from a guy who's claim to fame is how well he is able to hide the risk in esoteric or complex structured products?

Andy Fastow (Enron CFO) is really the one who executed all of the structured finance shenanigans. Skilling’s sin was lying about it to investors.

Lying to investors is the worst sin you can commit in the eyes of the SEC.

That's why he went to jail. Hopefully he learned his lesson and won't do it again. TBF, anyone investing with him and not double checking every single word he writes deserves what is coming to them. Even then, I bet the SEC will keep a close eye on him.

Anyone who invests in his business, as a VC or as a customer, deserves whatever calamity befalls them. I’m actually sort-of shocked there wasn’t some provision in his terms of release barring him from starting a similar type of business.

He should hire Elizabeth Holmes (whose father was a low-level Enron employee himself — by all accounts he was wholly unrelated to the whole fraud thing, but it’s still funny) just to bring the 21st century con artists full-circle.

Yeah it's crazy that he's allowed to do this after only being free for a year. People get their balls busted by probation for years after doing much, much less significant crimes.

She’s busy getting married to some mark.

How on earth was he not barred from the investment industry?

What can one person say? It is strange for this market to be similar with Enron. Keeping people in poor conditions without work is not good for so many people leaving jail. But he really hurt many.

This article states:

"The venture, called Veld LLC, plans to profit by charging a fee for marketing stakes in operating oil and gas wells, one of the people said, and will offer analytical data to investors interested in the well stakes.

Investors can acquire holdings in between one and 10 wells, which the presentation described as “pods,” and will be sold to the investors as high-yield investments, the people familiar with the business pitch said on the condition of anonymity."

What's the competitive advantage with this venture?

> What's the competitive advantage with this venture?

I fear that it will be retail investors.

my wife loves Tom Skilling (meteorologist for WGN 9/Chicago)

Jeffrey Skilling is his younger brother:

https://en.wikipedia.org/wiki/Tom_Skilling#Personal

A lot of the comments here are about investors. Think about it this way as well: if you were an engineer, would you work for Skilling? Hell, if you were anyone that did anything, would you work for him?

A lot of people would if he can satisfactorily answer the question "How much are you paying?"

"Are you smoking crack?" enron

--google it before downvoting, all these ignorant people making my Karma go negative

“In addition to Skilling, Veld consists of a Stanford mathematician with a doctoral degree helping start the venture.“ Does Stanford teach cooking the books in the math department? I remember almost investing in Enron except I couldn’t understand how they really made money.

Now that I live in CA I feel this is like announcing Jeffrey Dahmer is opening a BBQ joint.

What could possibly go wrong?!

#nottheonion

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