WASHINGTON (CN) – Former Enron Energy Services executive Lou Pai agreed to pay $31.5 to settle accusations of conducting insider trading at what was the nation’s seventh-largest company before its collapse in 2001. The settlement marks the largest payment made by an individual for civil allegations of insider trading.
Pai, 60, cashed out nearly $300 million in stock before quitting as chairman and CEO of Enron Energy Services, the company’s retail energy division. In May and June of 2001, Pai allegedly sold 338,897 shares and put an additional 572,818 shares on the open market through stock options when shares were averaging $53.78, compared to 40 cents after the Houston-based company declared bankruptcy in December 2001.
Pai’s attorney claimed that Pai sold his stock to help cover a divorce settlement, not because he received confidential information from management that his division was at risk.
Pai did not admit to any wrongdoing in his negotiations with the Securities and Exchange Commission. The settlement includes $30 million in restitution and a $1.5 million civil fine. The SEC credited Pai $6 million from funds forfeited in a class action with Enron shareholders. The remaining $25.5 million will be placed a fund for injured shareholders.