=DJ Enron Dn -2:WSJ Articles Cited CFO Conflict Of Interest
2001-10-19 13:30 (New York)


   By Tom Locke 
   Of DOW JONES NEWSWIRES 
 
  DENVER (Dow Jones)--Enron Corp. (ENE) shares fell 11.6% Friday, the third
daily drop in a row after negative articles appeared in The Wall Street Journal
Wednesday, Thursday and Friday. 

  The articles dealt largely with financial dealings between Enron's chief
financial officer, Andrew Fastow, losses incurred by Enron, and
conflict-of-interest charges against Fastow. On Tuesday the Houston energy
trader reported a third-quarter charge of $1.01 billion, mostly tied to
write-downs of business investments that had turned out badly. 

  Banc Of America Securities analyst William Maze said that much of the
information in The Journal articles was "rehashing things that were out there."

  But he said a number of investors came into the Enron stock in the third
quarter, were not overly familiar with the company, and have been jumping out
of the stock in the last three days because of the negative headlines. 

  Maze also said Enron could have better handled distribution of the
information regarding the $1.2 billion shareholders' equity writedown that The
Journal reported Thursday. 

  That Thursday article said that the equity reduction was not reported in
Enron's earnings release issued Tuesday but was mentioned briefly in a
subsequent call with analysts. The article also said that $35 million of the
$1.01 billion charge to earnings was tied to transactions with a limited
partnership, LJM2 Co-Investment LP, created by Fastow, the chief financial
officer. 

  Friday, The Journal reported that LJM2 realized millions in profits from its
transactions with Enron and benefitted from renegotiating terms of existing
deals. 

  Enron shares were recently down Friday $3.33, or 11.5%, at $25.67. They
dropped from a closing price of $33.84 on Tuesday to $32.20 on Wednesday and 29
on Thursday before the Friday decline.