Corporate & Securities Law

SCOTUS: Skilling and Honest Services

By John Wallbillich

Apparently a white collar conviction requires a crime to have been committed.

The US Supreme Court ruled today (PDF) in the case of former Enron executive Jeffrey Skilling. It found that the government’s use of a deprivation of “honest services” statute given Skilling’s conduct did not constitute a crime under federal law. This has been an area where the government has sought to expand the area of corporate conduct that could be prosecuted criminally.

The court held that under Title 18 of the US Code:

Section 1346, which proscribes fraudulent deprivations of ?the intangible right of honest services,? is properly confined to cover only bribery and kickback schemes. Because Skilling?s alleged misconduct entailed no bribe or kickback, it does not fall within the Court?s confinement of §1346?s proscription.

The court ruled on this point unanimously, but left it up to the lower court to determine whether the conviction should be overturned based upon other elements of the case. The Washington Post has a good summary here.

I recall years ago getting an annual form letter from Mr. Skilling’s former boss, Kenneth Lay. Mr. Lay informed all counterparties that Enron was committed to ethical business conduct, and that any concerns should be reported to their compliance department. At the time I believe there were a few hundred staff members working on compliance.

Enron had very good compliance training videos, too.

Full post as published by The Wired GC on June 24, 2010 (boomark / email).