Case Study Of Enron Scandal

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Case study on ENRON

ENRON scandal

WHAT is ENRON :

Enron carporation was an American energy commodities an service compnies based in Houstan Texas US.
From a pipeline company in 1980 Enron grew into worls largest energy trader using the internet to buy and sell the natural gas and electric power supplies form utilities and indusrial power uses and helping them hedge against fluctuations against power price
Founded : 1985 in Omaha Nebrasca US
Headquarter : Houstan US
Founders : Kenneth Lay , Jeffry skilling
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Kenneth Lay, who had been the (CEO) of Houston Natural Gas, became Enron's CEO , and quickly makes Enron into an energy trader and supplier. ENRON America’s most innovative company: By 1993, Enron had a number of limited liability special purpose entities that allowed Enron to hide its liabilities while growing its stock price.
Enron's stock price, which hit a high of United states $90 per share in mid 2000, caused shareholders to lose nearly $11 billion when it plummeted to less than $1 by the end of November 2001. Analysts were criticizing Enron for "swimming in debt," but the company continued to grow developing a large network of natural gas pipelines, and eventually moving into the pulp and paper and water sectors.

Biggest audit failue in history : The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Corporation and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron undoubtedly is the biggest audit
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Secndly high stock prices fueled suspesions in company audites – from a high of about $90.00 per share earlier in the year, to less than a dollar and when other auditers attraced to it , it come out of cover by investigations.
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Penalties :: Several Enron executives and Enron's auditor firm, Arthur Andersen, have since been indicted for a variety of charges including obstruction of justice for shredding documents and conspiracy to commit securities fraud, and some have been sentenced to prison Both the CEO sentenced to PRISON by the US carporate law but KEN LAYY commited suicide of fear of un known , skilling got prisoned for 24 years

New regulations in US:
 Due to the financial havoc it caused and its bad effect it left on people reaated to them ,,in July 2002, President Bush signed into law the Sarbanes-Oxley Act, intended to "enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud."

Learnings fron ENRON
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