Crouching Greed, Hidden Losses

Lou Pai's contributions to the Enron debacle.

Yet even if Pai knows more about the partnerships than he has admitted, angry shareholders may not be able to recover damages from him. He is one of numerous Enron executives named in dozens of shareholder lawsuits, but his position as head of various subsidiary companies could make him an elusive target.

"I'm not sure I know of any cases where there has been actual recovery of insider profits in a case brought by shareholders," says Philadelphia attorney Carole Broderick, who is representing one group of shareholders. In Pai's case, she adds, the plaintiffs will have to show not only knowledge of fraudulent activities, but also a direct link to misrepresentations about the stock.

Former Enron exec Lou Pai.
Former Enron exec Lou Pai.

"You're not liable, under the securities laws, simply for knowing what was going on," Broderick explains. "You have to have been a participant in the making of the false statements. [Pai] is some steps away from the corporate financial statements. Knowing is not a standard of liability, or there would be lots of Enron employees in trouble."

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