Joseph Hirko, et al.

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21089 / June 18, 2009

Accounting and Auditing Enforcement Release No. 2993 / June 18, 2009

Securities and Exchange Commission v. Joseph Hirko, et al., Civil Action No. H-03-0905 (S.D. Tex.)

SEC SETTLES PENDING CIVIL FRAUD CHARGES AGAINST JOSEPH HIRKO, FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF ENRON BROADBAND SERVICES

The Securities and Exchange Commission ("Commission") announced today that, on June 15, 2009, the U.S. District Court in Houston entered a final judgment in the Commission's pending civil action against Joseph Hirko, former Chairman and Chief Executive Officer of Enron Broadband Services ("EBS"). On May 1, 2003, the Commission charged Hirko and other EBS executives with securities fraud and insider trading. Without admitting or denying the allegations in the Commission's complaint, Hirko has now agreed to be permanently enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, to be permanently barred from serving as an officer or director of a public company, and to pay a $1 million civil money penalty.

The Commission settled this action in coordination with the Department of Justice, which entered into a plea agreement with Hirko on related charges in October 2008. In the criminal action, Hirko agreed to forfeit $7 million that, along with the Commission's disgorgement and civil penalties, will contribute over $8 million for the benefit of injured investors through the Commission's Enron Fair Fund.

As alleged in the Commission's complaint, Hirko and other EBS executives engaged in a fraudulent scheme to, among other things, make false or misleading statements about the technological prospects, performance, and financial condition of EBS. These statements were made at Enron's annual analyst conference and in multiple press releases during 2000. While aware of material non-public information concerning the true nature of EBS' technological and commercial condition, Hirko sold large amounts of Enron stock at inflated values and avoided substantial losses.

Hirko is scheduled to be sentenced in the U.S. District Court in Houston on September 28, 2009.

The Commission acknowledges the assistance of the U.S. Department of Justice.

For more information, see Litigation Release No. 18122 (May 1, 2003).