Enron Of Enron And Enron

One major scandal revealed in 2001 was Enron, a major energy company located in Houston, Texas (Auerbach, 2010, pp. 6). This organization collapsed because of their deceptive accounting practices and mismanagement. In 2001, Enron fraudulent practices became a public scandal, and because of these practices, shareholders lost $74 billion and thousands of employees (pp. 2). Unfortunately, investors lost their retirement accounts and because they lost many employees, it left many people unemployed. Essentially, Enron kept huge debts off their balance sheets. There were so many businesses and investors that were linked to Enron, and its bankruptcy was a major movement in Congress to make a legislative initiative towards the Sarbanes-Oxley Act of 2002.

Enron began as a pipeline company in Houston in 1985. It profited by promising to deliver so many cubic feet to a particular utility or business on a particular day at a market price.

Enron, the natural gas provider turned trader of natural gas commodities and in 1994, electric, was once touted as the seventh largest company in America. Kenneth Lay, founder, began changing Enron from just a provider into a financial energy powerhouse. Lay took advantage of the dot-com boom of the late 1990’s by creating Enron Online, an internet trading platform. Internet stocks were valued at astronomical prices and were all the rage on wall street, who accepted the increasing prices as normal (Investopedia). On December 2, 2001 Enron declared chapter 11 bankruptcy, resulting in the loss of twenty thousand jobs and billions of investor and creditor dollars. Enron, once designated as "America 's Most Innovative Company" by Fortune for six years consecutively, enacted massive financial fraud at the fault of its top level executives: Kenneth Lay, Jeffery Skilling, and Andrew Fastow.

On December of 2001, the nation’s seventh largest corporation valued at almost $70 billion dollars filed for bankruptcy. Illegal and fraudulent accounting procedures would led to the demise of the company. Over 20,000 people lost their jobs, and about $2 billion in pensions and retirement funds disappeared. Despite all this, Kenneth Lay, Jeffrey Skilling and Anthony Fastow profited greatly from Enron. These events resulted in the implementation of new legislation on the accuracy of financial reporting for public companies. The fall of Enron became known as the largest corporate bankruptcy in the United States at the time.

The collapse of Enron left thousands of employees without jobs and demolished the retirement accounts of employees and investors alike. Enron, a company much like General Electric (GE) was ranked as one of the top ten on the Fortune 500 list in 2001 (according to Fortune 500 archive list) right before Enron filed for bankruptcy in October of that year. According to an article by (http://articles.chicagotribune.com/2002-01-27/news/0201270343_1_enron-stock-market-cautious-investors) Flynn McRobertshe, “At one time the seventh-largest company in the country, Enron was a popular pick for many investors--both individuals and large institutions such as pension and mutual funds.” No one expected a company of that size to be able collapse and conduct business like Enron did. To many it was hard to believe

Enron was a company set up in 1985 by Kennet Lay, an ambitious and visionary man, who saw great potential from government deregulation in the energy market. Lay created Enron, through a merger between two small regional companies, Houston Natural Gas [1] and InterNorth [2]. The company

Enron’s demise was led by the arrogance and greed of senior executives. The belief was they had to be the best business leaders in the United States. Many also believe that there was a conflict of interest with the auditing firm because not only did they serve as the auditing firm, they also served as a consulting firm to Enron. This enabled them to fabricate financial statements by building assets and hiding debt from investors. The loss of the recorded $1.2 billion shareholders equity meant that many victims of this fraud lost their jobs and their retirement funds.

ENRON was established back in 1985 as an interstate pipeline company following the federal deregulation of natural gas pipelines. It was born from the merger of Houston Natural Gas and Omaha based InterNorth, a Nebraska pipeline company.

During 2001, Enron’s financial condition deteriorated rapidly after many of the company’s SPE transactions unraveled; in December 2001, Enron filed for bankruptcy.

The company Enron was formed in 1985 after two natural gas companies, Houston Natural Gas and InterNorth merged together. Kenneth Lay, former chief executive officer of Houston Natural Gas was named CEO of Enron and a year later, Lay was assigned to the chairman of Enron. A few years later, Enron launched a website to allow customers to buy stock for Enron, making it the largest business site in the world. The growth of Enron was rapid; it was even named seventh largest company on the Fortune 500 list; however things began to fall apart in 2001. (News, 2006). In the third quarter of that same year, Enron posted an enormous loss of over $600 million in four years. This is one of the reasons why one of the top executive resigned even though he had only after six months on the job. Their stock prices fell dramatically. Eventually, Enron filed for bankruptcy protection. This caused many investors to lose money they had invested in the company and employees to lose their jobs and their investments, including their retirement funds. The filing of bankruptcy and the resignation of one of the top executives, also led to an investigation by the U.S. Securities and Exchange Committee, which proved to be one of the biggest scandals in U.S. history. (News, 2006). All former senior executives stood trial for their illegal practices.

Enron started as a sound company that had a promising future in the oil and energy business. The companies CEO and CFO were charged on 35 different accounts of fraud, conspiracy, and insider trading that cleared most of its employee’s retirement pensions and billions of dollars for others (Unknown, 2016). It is impossible to account for every transaction that a company will produce, but the revamping of government

Enron was a U.S. based energy-trading company. At its height of operation in the early part of 2001, it was booking revenues of about $140 billion (Enron Ethics). At the end of 2001 it declared bankruptcy. The Enron bankruptcy was the largest corporate economic failure at that time, and still remains an example of how corrupt practices magnify in the long run. What led to Enron’s failure was primarily a lack of ethics, and poor accounting practices. This scandal was one of the reasons that new regulations were passed for financial reporting standards, the Sarbanes-Oxley Act was passed in 2002 as a means of stopping such a collapse in the future.

Enron began by merger of two Houston pipeline companies in 1985, although as a new company Enron faced a lot of financial difficulties in the starting years, though the company was able to survive these financial problems (Enron Ethics, 2010). In 1988 the deregulation of the electrical power markets came into action and flipped the company from up to down, after deregulation company business updated from delivering energy to becoming an energy broker and soon after this Enron once a company struggling

The story of Enron begins in 1985, with the merger of two pipeline companies, orchestrated by a man named Kenneth L. Lay (1). In its 15 years of existence, Enron expanded its operations to provide products and services in the areas of electricity, natural gas as well as communications (9). Through its diversification, Enron would become known as a corporate America darling (9) and Fortune Magazine’s most innovative company for 5 years in a row (10). They reported extraordinary profits in a short amount of time. For example, in 1998 Enron shares were valued at a little over $20, while in mid-2000, those same shares were valued at just over $90 (10), the all-time high during the company’s existence (9).

The case of Enron Corporation and Andersen, LLP can be noted as one of the most infamous fraud scandals in US history. Investors lost millions of dollars and ruined the public’s trust. Enron was once the seventh largest public company in the United States and Andersen LLP was the world’s largest and most respected business organizations. Enron’s stock prices soared to approximately $100 to less than $10 in 2001. How did these two big giants fall into oblivion and what could have been done to avoid the disaster of these companies?