Houston state representative says panel to call for some members of TSU’s Board of Regents to resign…Court of Appeals being asked to delay trial of Enron lenders…State Senate approves legislation to let state regulators review TXU’s pending sale…
A Houston lawmaker says a governor-appointed panel will call for some members of Texas Southern University’s Board of Regents to resign–immediately. House Democrat Garnet Coleman says a draft report by the panel will call for the resignations, rather than recommending that a conservator take over the financially troubled board. Coleman says the recommendations don’t name board members or specify how many should resign. He did say that some of the regents were good and should remain. Coleman also says the panel will recommend stiffer accountability measures that require regular progress reports to the state. Perry appointed the panel in January after a series of reports revealed a pattern of financial mismanagement at the school. A report by TSU’s interim chief financial officer last year outlined overspending, missing purchase orders and poor financial projections at the school. Last summer, the regents fired President Priscilla Slade after an investigation found that she spent more than $260,000 in school money–allegedly to decorate her own home. Slade denies wrongdoing and faces an August trial.
The 5th U.S. Circuit Court of Appeals is being asked to delay an April 16th trial by Merrill Lynch and two other former Enron lenders. They are charged with helping Enron manipulate earnings. But lawyers for Merrill Lynch, Credit Suisse Group and Barclays want the trial postponed until it’s decided whether a lawsuit by Enron shareholders can proceed as a class-action case. Investors are trying to recover as much as $40 billion in losses. U.S. District Judge Melinda Harmon will preside over the trial in Houston.
The state Senate has approved legislation to let state regulators review TXU’s pending sale to private investors. The bills also would bar utilities from controlling too big a piece of any geographic market in Texas. The legislation by Republican Senator Troy Fraser of Horseshoe Bay also would force electric companies to refund money made by abusing their market power. Electric deregulation won approval in the legislature in 1999, and the state has been phasing it in since then. Texans in deregulated zones were first allowed to choose their electric providers in 2002. Since then, consumer advocates say prices have risen for residential customers. A report released earlier this week found TXU manipulated the Texas electric market in 2005. It put the cost to consumers was $70 million. It also said it gave TXU $20 million in extra profits. Dallas-based TXU says it believes it followed state rules. An investment group led by Kohlberg Kravis Roberts and Fort Worth-based Texas Pacific Group agreed last month to buy TXU for $32 billion in the biggest leveraged buyout ever.
The Securities and Exchange Commission has identified at least one of the people involved in an insider-trading case pegged to the proposed TXU buyout. SEC charges alleged illegal trades followed news that the Dallas-based electric utility had agreed to be bought by private equity firms for $45 billion. Kit Addleman is associate district administrator of the SEC’s Fort Worth office. He says the agency hasn’t amended its pleadings to identify one or more of those accused, but it anticipates doing so soon. The SEC earlier this month won a court order freezing $5.4 million in assets of some unknown buyers of TXU call options. TXU shares surged nearly 14 percent in early trading on February 26th. That’s the day the deal was announced with an investor group led by Kohlberg Kravis Roberts and company and Fort Worth-based Texas Pacific Group. But on the Friday before the announcement, some 18,000 TXU call options changed hands. That’s more than seven times the average daily volume for the rest of February. The case is being heard in federal court in Chicago.