Enron scandal

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Enron Corporation
Type Defunct / Asset-less Shell
Founded Omaha, Nebraska, 1985
Headquarters Houston, Texas, United States
Key people Kenneth Lay, Founder, former Chairman and CEO
Jeffrey Skilling, former President, CEO and COO
Andrew Fastow, former CFO
Rebecca Mark-Jusbasche, former Vice Chairman, Chairman and CEO of Enron International
Stephen F. Cooper, Interim CEO and CRO
John J. Ray, III, Chairman
Industry formerly Energy
Revenue $101 billion (in 2000)
Employees approx. 22,000 in 2000
approx. 4 as of 2008.
Website http://www.enron.com/

The Enron scandal was a financial scandal involving Enron Corporation (former NYSE ticker symbol: ENE) and its accounting firm Arthur Andersen, that was revealed in late 2001. After a series of revelations involving irregular accounting procedures conducted throughout the 1990s, Enron was on the verge of bankruptcy by November 2001. A white knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable.[clarification needed] Enron filed for bankruptcy on December 2, 2001.

As the scandal was revealed, Enron shares dropped from over US$90.00 to less than 50¢. Enron's plunge occurred after revelations that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled). The result was that many of Enron's debts and the losses that it suffered were not reported in its financial statements.

In addition, the scandal caused the dissolution of Arthur Andersen, which at the time was one of the five largest accounting firms in the world.

Contents

[edit] Background of Enron

"At the beginning of 2001, the Enron Corporation, the world's dominant energy trader, appeared unstoppable. The company's decade-long effort to persuade lawmakers to deregulate electricity markets had succeeded from California to New York. Its ties to the Bush administration assured that its views would be heard in Washington. Its sales, profits and stock were soaring. "
—A. Berenson and R. A. Oppel Jr.The New York Times, Oct 28, 2001.[1]

In the early 1990s the Congress of the United States of America passed legislation deregulating the sale of electricity. It had done the same for natural gas some years earlier. The resulting energy markets made it possible for companies like Enron to thrive, while the resultant price volatility was often bemoaned by producers and local governments.[2] Strong lobbying on the part of Enron and others, however, kept the system in place.[3][4]

Enron had created offshore entities, units which may be used for planning and avoidance of taxes, raising the profitability of a business. The names of these SPEs, or special purpose entities, were Bob West Treasure, Jedi and Hawaii [2]. This provided ownership and management with full freedom of currency movement, and full anonymity, that would keep losses the company was taking off of the balance sheets. These entities made Enron look more profitable than it actually was, and created a dangerous spiral in which each quarter, corporate officers would have to perform more and more contorted financial deception to create the illusion of billions in profits while the company was actually losing money. This practice drove up their stock price to new levels, at which point the executives began to work on insider information and trade millions of dollars worth of Enron stock. The executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company; however, the investors knew nothing of this. Chief Financial Officer Andrew Fastow led the team which created the off-books companies, and manipulated the deals to provide himself, his family, and his friends with hundreds of millions of dollars in guaranteed revenue, at the expense of the corporation he worked for and its stockholders.

In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually every energy company in the United States. President and chief operating officer Jeffrey Skilling began advocating a novel idea: the company did not really need any "assets." By pushing the company's aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, with $27 billion traded in a quarter. The firm's figures, however, had to be accepted at face value. Under Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal were tabulated as if real today. Thus, Enron could record gains from what over time might turn out losses, as the company's fiscal health became secondary to manipulating its stock price on Wall Street during the Tech boom. But when a company's success is measured by agreeable financial statements emerging from a black box, a term Skilling himself admitted, actual balance sheets prove inconvenient. Indeed, Enron's unscrupulous actions were often gambles to keep the deception going and so push up the stock price, which was posted daily in the company elevator. An advancing number meant a continued infusion of investor capital on which debt-ridden Enron in large part subsisted. Its fall would collapse the house of cards. Under pressure to maintain the illusion, Skilling verbally attacked Wall Street Analyst Richard Grubman[5], who questioned Enron's unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied "Well, thank you very much, we appreciate that . . . asshole." Though the comment was met with dismay and astonishment by press and public, it became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling's lack of tact.[6]

By the late 1990s Enron's stock was trading for $80–90 per share, and few seemed to concern themselves with the opacity of the company's financial disclosures. In mid July 2001, Enron reported earnings of $50.1 billion, almost triple year-to-date, beating analysts' estimates by 3 cents a share.[7] Despite this, Enron's profit margin had stayed at a modest average of about 2.1%, and its share price had dropped by over 30% since the same quarter of 2000.[8]

However, concerns were mounting. Enron had recently faced several serious operational challenges, namely logistical difficulties in running a new broadband communications trading unit, constructing the Dabhol Power project, a large power plant in India, and criticism of the company for the role it allegedly had played in the power crisis of California in 2000-2001.

[edit] Timeline of Enron's downfall

Main article: Timeline of the Enron scandal

August 14, 2001, Jeffrey Skilling, the chief executive of Enron, a former energy consultant at McKinsey & Company who joined Enron in 1990, announced he was resigning his position after only six months.

"[T]he reasons for leaving the business are personal," said Skilling at the time, "but I'd just as soon keep that private."[9] Observers noted that in the months leading up to his exit, Skilling had sold at minimum 450,000 shares of Enron at a value of around $33 million (though he still owned over a million shares at the date of his departure).[10] Nevertheless, Kenneth Lay, the chairman at Enron, reassured analysts by affirming that there was "[a]bsolutely no accounting issue, no trading issue, no reserve issue, no previously unknown problem issues" prompting the departure. He further assured stunned market watchers that there would be "no change in the performance or outlook of the company going forward" from Skilling's departure.[11] Lay announced he himself would re-assume the position of chief executive.

The next day, however, Skilling admitted that a very significant reason for his departure was Enron's faltering price in the stock market.[12] The columnist Paul Krugman, writing in the NY Times, asserted that Enron was an illustration of the consequences that occur from the deregulation and commodification of things such as energy.[13] A few days later, in a letter to the editor, Kenneth Lay defended Enron and the philosophy behind the company:

The broader goal of [Krugman's] latest attack on Enron appears to be to discredit the free-market system, a system that entrusts people to make choices and enjoy the fruits of their labor, skill, intellect and heart. He would apparently rely on a system of monopolies controlled or sponsored by government to make choices for people. We disagree, finding ourselves less trusting of the integrity and good faith of such institutions and their leaders.

The example Mr. Krugman cites of "financialization" run amok (the electricity market in California) is the product of exactly his kind of system, with active government intervention at every step. Indeed, the only winners in the California fiasco were the government-owned utilities of Los Angeles, the Pacific Northwest and British Columbia. The disaster that squandered the wealth of California was born of regulation by the few, not by markets of the many. [14]

[edit] Investors begin to worry

Something is rotten with the state of Enron.
—The New York Times, Sept 9, 2001.[15]

By the end of August 2001, his company's stock still falling, Lay named Greg Whalley, 39, president and chief operating officer of Enron Wholesale Services and Mark Frevert, 46, who was previously Mr. Whalley's superior at Enron Wholesale, to positions in the chairman's office. Some observers suggested that Enron's investors were in significant need of reassurance, not least because the company's business was difficult to understand (even "indecipherable"[16]) and difficult to properly express in a financial statement.[17] "[I]t's really hard for analysts to determine where [Enron] are making money in a given quarter and where they are losing money," said one analyst.[18] Lay accepted that Enron's business was very complex, but asserted that analysts would "never get all the information they want" to satisfy their curiosity. He also explained that the complexity of the business was due largely to tax strategies and position-hedging.[19]

Lay's efforts seemed to meet with limited success; by September 9, 2001, one prominent hedge fund manager noted that "[Enron] stock is trading under a cloud."[20] The sudden departure of Skilling combined with the opacity of Enron's accounting books made proper assessment difficult for Wall Street. In addition, the company admitted to repeatedly using "related-party transactions," which some feared could be too-easily used to transfer losses that might otherwise appear on Enron's own balance sheet. A particularly troubling aspect of this technique was that several of the "related-party" entities had been or were being controlled by Enron's Chief Financial Officer (CFO), Andrew Fastow.[21]

After the September 11, 2001 attacks, media attention shifted away from the company and its troubles; a little less than a month later Enron announced its intention to begin the process of shearing its lower-margin assets in favor of its core businesses of gas and electricity trading. This move included selling Portland General Electric to another Oregon utility, Northwest Natural Gas, for about $1.9 billion in cash and stock, and possibly selling its 65% stake in the Dabhol project in India.[22]

[edit] The crisis begins to unfold

On October 17, 2001, Enron announced that its third-quarter results were negative due to one-time charges of over $1 billion. Enron management claimed the losses were mostly due to investment losses, along with charges such as about $180 million in money spent restructuring the company's troubled broadband trading unit. "After a thorough review of our businesses, we have decided to take these charges to clear away issues that have clouded the performance and earnings potential of our core energy businesses," said Kenneth Lay in a statement.[23] Some analysts were unnerved. "What's next?," asked David Fleischer at Goldman Sachs, an analyst called previously 'one of the company's strongest supporters' [24] asserting that the Enron management "lost credibility and have to reprove themselves. They need to convince investors these earnings are real, that the company is for real and that growth will be realized".[25]

Additionally Enron asserted that the broadband unit alone was worth $35 billion, a claim also mistrusted. "I don't think anyone knows what the broadband operation is worth," said Todd Shipman, an analyst at Standard & Poor's.[26]

On October 22, 2001, the share price of Enron fell to $20.65, down $5.40 in one day, following the SEC's announcement that it was investigating several suspicious deals struck by Enron, pronouncing "some of the most opaque transactions with insiders ever seen".[27] Attempting to explain the billion dollar charge and calm investors, Enron's disclosures spoke of "share settled costless collar arrangements," "derivative instruments which eliminated the contingent nature of existing restricted forward contracts," and strategies that served "to hedge certain merchant investments and other assets." Such puzzling phraseology left many analysts feeling ignorant about just how Enron ran its business.[28]

Regarding the SEC investigation, chairman and CEO Lay said, "We will cooperate fully with the S.E.C. and look forward to the opportunity to put any concern about these transactions to rest."[29]

[edit] "There is an appearance that you are hiding something"

Concerns about Enron's liquidity prompted Lay to participate in a conference call on Oct. 23, in which he attempted to reassure investors that the company's cash resources were ample and no further "one-time charges" loomed. Secondly, Lay adamantly insisted there were no improprieties regarding Enron's transactions with partnerships run by Andrew Fastow. Lay emphasized his support for Fastow.[30] David Fleischer, the analyst at Goldman, was again skeptical, telling Lay and Fastow, "There is an appearance that you are hiding something." Nevertheless, Fleischer persisted in recommending the stock, arguing that he didn't "think accountants and auditors would have allowed total shenanigans."[31] Lay also attempted to reassure the conferees by stressing that all of Enron's financial and accounting maneuvers had been scrutinized by their auditor, Arthur Andersen. After several questioners pressed the issue, Lay stated Enron management would "look into providing" more detailed statements for the end of better understanding the company's relationship with the special entities as those run by Fastow.[32]

Two days later, on October 25, 2001, despite his reassurances days earlier, Kenneth Lay removed Fastow from his position. Enron's stock was now trading at $16.41, having lost half its value in a little over a week. "In my continued discussions with the financial community, it became clear to me that restoring investor confidence would require us to replace Andy as C.F.O.," said Lay in the statement announcing Fastow's exit.[33] However, with Skilling and Fastow now both departed, some analysts feared that shedding light on the company's practices would be made all the more difficult.[34]

On October 27 the company began buying back all its commercial paper, valued at around $3.3 billion, in an effort to keep investors from fearing about Enron's supply of cash. Enron financed the re-purchase by depleting its lines of credit at several banks. While the company's debt rating was still considered investment-grade, its bonds were trading at levels slightly below, making future sales problematic.[35]

As October 2001 came to a close, serious concerns were being raised by some observers regarding Enron's possible manipulation of accepted accounting rules; however, some claimed analysis was impossible based on the incomplete information provided by Enron.[36]

Some now openly feared that Enron was the new Long-Term Capital Management, the hedge fund whose collapse in 1998 threatened systemic failure in the international financial markets. Enron's tremendous presence worried some about the consequences of Enron's possible collapse.[37] Enron executives were tight-lipped, accepting questions in written form only.[38]

[edit] Credit rating danger

The central short-term danger to Enron's survival at the end of October 2001 seemed to be its credit rating. It was reported at the time that Moody's and Fitch, two of the three biggest credit-rating agencies, had slated Enron for review for possible downgrade.[39] Such a downgrade would force Enron to issue millions of shares of stock to cover loans it had guaranteed, a move that would bring down the value of existing stock further.

Additionally, all manner of companies began reviewing their existing contracts with Enron, especially in the long term, in the event that Enron's rating were lowered below investment grade, a possible hindrance in future transactions.[40]

Analysts and observers continued their chorus of complaints regarding Enron's difficulty or impossibility of properly assessing a company whose financial statements were so mysterious. Some feared that no one at Enron apart from Skilling and Fastow could completely explain years of mysterious transactions. "You're getting way over my head," said Ken Lay in late August 2001 in response to detailed questions about Enron's business, a reaction that worried analysts.[41]

On October 29, 2001, responding to growing concerns that Enron might in the short-term have insufficient cash on hand, the news spread that Enron was seeking a further $1–2 billion in financing from the banks.[42]

The next day, as feared, Moody's lowered Enron's credit rating, or senior unsecured long-term debt ratings, to Baa2, two levels above so-called junk status, from Baa1. Standard & Poor's also lowered their rating to BBB+, the equivalent of Moody's rating. Moody's also warned that it might downgrade Enron's commercial paper rating, the consequence of which might be preventing the company from finding the further financing it sought to keep solvent.[43]

November began with the disclosure that the SEC was now pursuing a formal investigation, prompted by questions related to Enron's dealings with "related parties". Enron's board also announced that it would commission a special committee to investigate the transactions, headed by William C. Powers, the dean of the University of Texas law school. "We welcome this request" to cooperate with the SEC, said Kenneth Lay in a statement.[44] The next day, an editorial in the New York Times called for an "aggressive" investigation into the matter.[45]

On November 2, 2001 Enron succeeded in securing an additional $1 billion in financing, but the news was not universally admired in that the debt was secured with the company's valuable Northern Natural Gas and Transwestern Pipeline.[46]

Sources claimed that Enron was planning to explain its business practices more fully within the coming days, as a confidence-building gesture.[47] Enron's stock was now trading at around $7, as investors worried that the company would not be able to find a buyer.

After it received a wide spectrum of rejections, Enron management apparently found a buyer when the board of Dynegy, another energy trader based in Houston, TX, voted late at night on November 7 to acquire Enron "at a fire-sale price"[48] or about $8 billion in stock. Chevron Texaco, which at the time owned about a quarter of Dynegy, agreed to provide Enron with $2.5 billion in cash, specifically $1 billion up front and the rest when the deal was completed. Dynegy would also be required to assume nearly $13 billion of debt, plus any other debt hitherto occluded by the Enron management's secretive business practices[49], possibly as much as $10 billion in "hidden" debt.[50] Dynegy and Enron confirmed their deal on November 8, 2001.

Commentators remarked on the different corporate cultures between Dynegy and Enron, and on the "straight-talking" personality of the CEO of Dynegy, Charles Watson.[51] Some wondered if Enron's troubles had not simply been the result of innocent accounting errors.[52] By November, Enron was asserting that the billion-plus "one-time charges" disclosed in October should in reality have been $200 million, with the rest of the amount simply corrections of dormant accounting mistakes.[53] Many feared other "mistakes" and restatements might yet be revealed.[54]

November 9, 2001 brought with it another major correction of Enron's earnings with a reduction of $591 million over the stated revenue of years 1997-2000. The charges were said to come largely from two special purpose partnerships, called "JEDI" and "Chewco". The corrections resulted in the virtual elimination of profit for fiscal year 1997, with significant reductions every other year. Nevertheless Dynegy was reported to have not lost interest in purchasing Enron despite this disclosure.[55] Both companies were said to be anxious to receive an official assessment of the proposed sale from Moody's and S&P (considered by some a "do or die"[56] deal for Enron) presumably to understand the effect on Dynegy and Enron's credit rating the completion of any buyout transaction. In addition, concerns were raised regarding antitrust regulatory hurdles leading to possible divestiture, along with what to some observers were the radically different corporate cultures of Enron and Dynegy.[57]

Nevertheless both companies pushed aggressively for the deal, and some observers were hopeful; Charles Watson was praised for his vision in attempting to create the biggest presence on the energy market in one fell swoop.[58] "We feel [Enron] is a very solid company with plenty of capacity to withstand whatever happens the next few months," said Watson at the time.[59] One analyst called the deal "a whopper [...] a very good deal financially, certainly should be a good deal strategically, and provides some immediate balance-sheet backstop for Enron."[60]

Credit issues were becoming more critical, however. Around the time the buyout was made public, Moody's and S&P both lowered Enron's rating to just one notch above junk status. Were the company's rating to fall below investment-grade, its ability to trade might be severely limited subsequent to a curtailment or elimination of its credit lines with competitors.[61] In a conference call, S&P affirmed that, were Enron not to be taken over, S&P would cut its rating cut to low BB or high B, ratings "not even at the high end of junk".[62] Furthermore many traders had limited their doing business with Enron, or stopped altogether, fearing more bad news. But Watson again attempted to re-assure, affirming during a presentation to investors in New York that there was "nothing wrong with Enron's business."[63] He also acknowledged that remunerative steps (in the form of more stock options) would have to be taken to redress the animosity of many Enron employees for management after it was revealed that Lay and other top officials had sold hundreds of millions of dollars worth of stock in the months leading up to the crisis.[64] The situation was not helped by the disclosure that Kenneth Lay, his "reputation in tatters"[65], stood to receive a payment of $60 million as a change-of-control fee subsequent to the Dynegy acquisition, and this while many Enron employees had seen their retirement accounts, which were largely based on Enron stock, decimated as the price fell 90% in a year. "We had some married couples who both worked who lost as much as $800,000 or $900,000," said an official at a company owned by Enron. "It pretty much wiped out every employee's savings plan."[66]

Watson assured investors that the true nature of Enron's business had been made clear to him: "We have comfort there is not another shoe to drop. If there is no shoe, this is a phenomenally good transaction," he said at the time.[67] Watson further asserted that Enron's energy trading part alone was worth the price Dynegy was paying for the whole company.[68]

[edit] The Other Shoe Drops

By mid-November, Enron announced it was planning to sell about $8 billion worth of underperforming assets, along with a general plan to reduce its scale for the sake of financial stability.[69]

On November 19, 2001 Enron disclosed to the public further evidence of its critical state of affairs. Most pressingly that the company was facing debt repayment obligations in the range of $9 billion by the end of 2002. Such debts were "vastly in excess" of its available cash.[70] Also, the success of measures to preserve its solvency were not guaranteed, specifically as regarded asset sales and debt refinancing. "An adverse outcome with respect to any of these matters would likely have a material adverse impact on Enron's ability to continue as a going concern," said Enron in a statement.[71]

Two days later, on November 21, Wall Street was expressing serious doubts that Dynegy would proceed with its deal at all, or would seek to radically renegotiate. Furthermore Enron revealed in a 10Q filing that almost all the money it had recently borrowed for purposes including buying its commercial paper, or about $5 billion, had been exhausted in just 50 days. Analysts were unnerved at the revelation, especially since Dynegy was reported to also have been unaware of Enron's rate of cash use.[72]

In order to walk away from the proposed buyout, Dynegy would need to legally demonstrate a "material change" in the circumstances of the transaction; as late as November 22, sources close to Dynegy were skeptical that the latest revelations constituted sufficient grounds.[73]

The SEC announced it had filed civil fraud complaints against Arthur Andersen LLP, Enron's auditor.[74] A few days later, sources claimed Enron and Dynegy were now actively renegotiating the terms of their arrangement.[75] Dynegy now demanded Enron agree to be bought for $4 billion rather than the previous $8 billion. Observers were reporting difficulties in ascertaining whether or which of Enron's operations, if any, were profitable. Reports described an en masse shift of business to Enron's competitors for the sake of risk exposure reduction. Finally, a new report from Moody's made Wall Street nervous.[76]

[edit] The deal falls apart

On November 28, 2001, Enron's two worst outcomes came true. Dynegy Inc. unilaterally disengaged from the proposed acquisition of the company and Enron's credit rating fell to junk status. The company, having very little cash with which to run its business, let alone satisfy enormous debts, imploded. Its stock price fell to $0.61 at the end of the day's trading. "Enron is now shorthand for the perfect financial storm," wrote one editorial observer.[77]

Systemic consequences were felt, as Enron's creditors and other energy trading companies suffered the loss of several percentage points. Some analysts felt Enron's failure highlighted the risks of the post-September 11 economy, and encouraged traders to lock in profits where they could.[78]

The question now became determining the total exposure of the markets and other traders to Enron's failure. Early figures put the number at $18.7 billion. "We don't really know who is out there exposed to Enron's credit," said one adviser. "I'm telling my clients to prepare for the worst."[79]

Enron was estimated to have about $23 billion in liabilities, both debt outstanding and guaranteed loans. Citigroup and JP Morgan Chase in particular appeared to have significant amounts to lose with Enron's fall. Additionally, many of Enron's major assets were pledged to lenders in order to secure loans, throwing into doubt what if anything unsecured creditors and eventually stockholders might receive in bankruptcy proceedings.[80]

Enron's European operations filed for bankruptcy on November 30, 2001, and it sought Chapter 11 protection in the U.S. two days later on December 2. At the time, it was the biggest bankruptcy in U.S. history, and it cost 4,000 employees their jobs.[81][82]

The day that Enron filed for bankruptcy, Enron's workers were told to pack up their belongings and were given 30 minutes to vacate the building.[83]

[edit] Trial of Executives

Kenneth Lay, the former Chairman of the Board and Chief Executive Officer and Jeffrey Skilling, former Chief Executive Officer and Chief Operating Officer, went on trial for their part in the Enron scandal in January 2006. The 53-count, 65-page indictment covers a broad range of financial crimes, including bank fraud, making false statements to banks and auditors, securities fraud, wire fraud, money laundering, conspiracy and insider trading. U.S. District Judge Sim Lake had previously denied motions by the defendants to hold separate trials and to move the case out of Houston, where the defendants argued the negative publicity surrounding Enron's demise would make it impossible to get a fair trial.

Lay pleaded not guilty to the eleven criminal charges. Lay stated that he was misled by those around him. At the time of his death in July, 2006 the U.S. Securities and Exchange Commission (SEC) had been seeking more than $90 million from Lay in addition to civil fines.

The case surrounding Mrs. Linda Lay is a difficult one. Mrs. Lay sold roughly 500,000 shares of Enron ten minutes to thirty minutes before the information that Enron was collapsing went public on November 28, 2001.[84] This was information that Enron executives had known for over a year.

Former managing director of investor relations for Enron Paula Rieker pleaded guilty in federal court to a criminal insider trading charge. She obtained 18,380 Enron shares for $15.51 a share and sold that stock for $49.77 a share in July 2001, a week before the public was told what she already knew about the $102 million loss. The one felony charge against Rieker carries a maximum penalty of ten years in prison and a $1 million fine. Rieker agreed never again to serve as an officer or director of a public company. If a federal court approves the settlement, Rieker will pay the SEC $499,333, the profit from the sale of 18,380 shares of Enron stock. Rieker has been a valuable witness for the government as she prepared earnings releases and conference calls with Enron analysts.

On December 28, 2005, former CAO Richard Causey pleaded guilty to securities fraud. He will have to serve 7 years in prison and pay $1.25 million to the U.S. Government. Causey has the possibility of only serving 5 years in prison if he cooperates and testifies with Lay and Skilling.

On January 13, 2006 lobbyist William "Art" Roberts pleaded guilty to impersonating Senate staff members during the investigation. Roberts was hired by a German bank in June 2004 to get a letter from a Senate subcommittee stating the bank had done their due diligence investigating the Enron collapse, as part of the bank's defense in a suit filed against it by a London bank. [85]

Lay and Skilling were indicted for securities and wire fraud in July 2004, leading to a highly-publicized trial in which Lay was convicted on all six counts and Skilling on 19 of 28 counts on May 25, 2006. On July 5, 2006, Lay died at age 64 while vacationing in Aspen, Colorado, after suffering a heart attack on July 4. Skilling was convicted and sentenced to 24 years, 4 months in a federal prison on October 23, 2006. As well as his sentence of 24 years, 4 months, he was ordered to restore the Enron pension fund with $26 million out-of-pocket. It is expected that he will appeal.

[edit] Liquidation

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Enron's party insolvency took the form of a liquidation, rather than a restructuring, as initially expected, and even announced on the company's website. Assets considered "non-core", such as Enron's energy and bandwidth trading businesses, the Enron Wind energy unit, and the IT consulting businesses, were divested. Also included in the divestiture process were oil field services company Mariner Energy (in which Enron held a 98% controlling interest) and INSELA, a Venezuelan gas valve and electrical equipment manufacturer in which Enron held 50%. Also sold outright were Enron's paper and forest products companies in the U.S. and Canada, consisting of Garden State Paper Company, Papiers Stadacona, and St. Aurelie Timberlands.

Enron's sole electric utility in the United States, Portland General Electric, was spun off as an independent company in 2006, with its shares disbursed to creditors.

The remainder of Enron's operations were reorganized under two major subsidiaries formed in 2003: CrossCountry Energy, consisting of Enron's domestic gas pipeline interests; and Prisma Energy International, formed from most of Enron's global electricity generation and distribution businesses, formerly referred to as "Enron International". CrossCountry Energy was sold to CCE Holdings, a joint venture of Southern Union and a unit of General Electric, in 2004. The spin-off of Portland General Electric in 2005 left Prisma Energy as Enron's last major business asset. Prisma Energy itself was ultimately sold to Ashmore Energy International in 2006, leaving Enron Corp. as a non-trading "shell" company, now in the final stage of its bankruptcy liquidation. Between the initial proposal of the reorganization plan in 2002, and the formal creation of Prisma Energy International and CrossCountry Energy in 2003, the two proposed companies were referred to within Enron as "InternationalCo" and "PipeCo" respectively.

To reflect its new status as a largely asset-less shell existing solely to manage final payouts to creditors, Enron changed its legal, corporate name to "Enron Creditors Recovery Corporation", d/b/a Enron Corporation, in early 2007.

Perhaps one of Enron's few remaining assets is DealBench, an online transaction and divestiture service, once part of the now defunct EnronOnline.

[edit] Fallout

The long-term trials and implications of Enron's collapse are somewhat unclear, but there is considerable political fallout both in the U.S. and in the UK relating to the money Enron gave to political figures (around US$7 million since 1990). During Clinton's eight years in office, the company and Lay contributed about $900,000 to the Democratic Party. In 1999 and 2000, the company gave $362,000 in soft-money donations to Democrats. Since 1996, between 72% and 94% of yearly American contributions went to the Republican Party, including heavy contributions to George W. Bush's presidential campaign.

Fallout from the scandal quickly extended beyond Enron and all those formerly associated with it. The trial of Arthur Andersen LLP on charges of obstruction of justice related to Enron helped to expose accounting fraud at WorldCom. The subsequent bankruptcy of that telecommunications firm quickly set off a wave of other accounting scandals. This wave engulfed many companies, exposing high-level corruption, accounting errors, and insider trading. Though at the time of its collapse, Enron was the largest bankruptcy in history, this has been eclipsed by the collapse of WorldCom and most recently, the collapse of Lehman Brothers.

Former Enron CFO Andrew Fastow, the mastermind behind Enron's complex network of offshore partnerships and questionable accounting practices, was indicted on November 1, 2002, by a federal grand jury in Houston on 78 counts including fraud, money laundering, and conspiracy. He and his wife Lea Fastow, former assistant treasurer, accepted a plea agreement on January 14, 2004. Andrew Fastow will serve a ten-year prison sentence and forfeit US $23.8 million, while Lea Fastow will serve a five-month prison sentence and a year of supervised release, including five months of house arrest; in return, both will provide testimony against other Enron corporate officers.

Ben Glisan Jr., a former Enron treasurer, was the first man to be sent to prison in the Enron scandal. He pleaded guilty to one count of conspiracy to commit security and wire fraud. Michael Kopper, along with Ben Glisan, was closely tied to Andrew Fastow during the Enron Scandal. Kopper was recruited from the Toronto Dominion Bank, where he occupied a role in structured financing. He joined Enron at the young age of 29 as a managing director of Enron Global Finance, and, as expected, quickly became a "valuable asset to the company". Nonetheless, Kopper would be one of the main ingredients in Enrons recipe for disaster when he, along with Glisan, would help Fastow create the off-balance sheets for the corporation.

Although Michael Kopper worked for Enron for over seven years before the scandal became public, he was always under the radar. Kenneth Lay, Enron CEO, did not know of Kopper even after the company's bankruptcy. Kopper was able to keep his name anonymous in the entire affair, as the spotlight remained on Fastow throughout the entire affair.[86]

John Forney, a former energy trader who invented various strategies such as the "Death Star," was indicted in December 2002, on 11 counts of conspiracy and wire fraud. His trial was scheduled for October 12, 2004. His supervisors, Timothy Belden and Jeffrey Richter, have both pled guilty to conspiring to commit wire fraud and currently are aiding prosecutors in investigating this scandal.

Jeffrey Skilling was arrested on February 11, 2004, by the FBI. Kenneth Lay was indicted by a federal grand jury on July 7, 2004 for his involvement in the scandal. He pleaded not guilty on July 9.

On May 25, 2006, the jury in the Lay and Skilling trial returned its verdicts. Skilling was convicted of 19 of 28 counts of securities fraud and wire fraud and acquitted on the remaining nine, including charges of insider trading. He was sentenced to 24 years, 4 months in prison. Lay was convicted of all six counts of securities and wire fraud for which he had been tried, and he faced a total sentence of up to 45 years in prison. [87] Lay died on July 5, 2006, before sentencing was scheduled. On July 12, 2006, a potential Enron witness scheduled to be extradicted to the US, Neil Coulbeck, was found dead in a park in north-east London.[3] The US case alleges that Coulbeck and others conspired with former Enron CFO Andrew Fastow.[4] All told, sixteen people pleaded guilty for crimes committed at the company, and five others, including four former Merrill Lynch employees, were found guilty at trial. Eight former Enron executives testified, the star witness being Fastow, against Lay and Skilling, his former bosses. [88] Another was Kenneth Rice, the former chief of Enron Corp.'s high-speed Internet unit, who cooperated and whose testimony helped convict Skilling and Lay. In June 2007, he received a 27 month sentence.[89]

[edit] Pensions

Thousands of Enron employees and investors lost all their savings, children's college funds, and pensions when Enron collapsed. A lawsuit on the behalf of a group of Enron's shareholders has been filed against Enron executives and directors. This lawsuit accuses twenty-nine of these executives and directors of insider trading and misleading the public.

Because the 401(k) plan is a defined contribution plan, there was no PBGC insurance and employees lost the money they invested in Enron stock. They could only sue those considered a fiduciary for breach of their duty of care based on ERISA Section 404.

The Pension Benefit Guaranty Corporation is attempting to cover some and possibly all of these benefits.

[edit] Arthur Andersen

On June 15, 2002, Arthur Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. Since the U.S. Securities and Exchange Commission does not allow convicted felons to audit public companies, the firm agreed to surrender its Certified Public Accountant licenses and its right to practice before the SEC on August 31. On May 31, 2005, the Supreme Court of the United States unanimously overturned Andersen's conviction due to flaws in the jury instructions. Despite this ruling, Andersen has not returned as a viable business even on a limited scale. There are over 100 civil suits pending against the firm related to its audits of Enron and other companies. It began winding down its American operations after the indictment. From a high of 28,000 employees in the U.S. and 85,000 worldwide, the firm is now down to around 200 based primarily in Chicago. Most of their attention is on handling the lawsuits.

Andersen was one of the "Big Five" large international accounting firms. Its demise left only four big international accounting firms (now called the Big Four). This concentration of the industry is still causing difficulty for large corporations that need to use more than one accounting firm for auditing and non-auditing services. In addition, the pricing of accounting services is less elastic as large corporations feel that they must use a Big Four firm.

[edit] Societal and legal impacts

Enron's collapse also contributed to the creation of the U.S. Sarbanes-Oxley Act (SOX), signed into law on July 30, 2002. It is considered the most significant change to federal securities laws since FDR's New Deal in the 1930s. Other countries have also adopted new corporate governance legislations. This law provides stronger penalties for fraud and, among other things, requires public companies to avoid making loans to management, to report more information to the public, to maintain stronger independence from their auditors, and most controversially, to report on and have audited, their financial internal control procedures. However, certain provisions in the legislation are currently under review in Congress....

Securities law historian Joel S. Seligman was quoted in The Washington Post saying, "[t]his was the most important corporate scandal of our lifetimes. It was one of the immediate causes of the Sarbanes-Oxley Act, the governance reforms of the New York Stock Exchange and NASD, and the most consequential reorientation of corporate behavior in living memory." [5]

In California, widespread public anger over the power crisis and its financial impact on the state were a major factor contributing to the recall of Governor Gray Davis and the election of Arnold Schwarzenegger.

[edit] Class action lawsuit

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On April 8, 2002, Lerach Coughlin Stoia Geller Rudman & Robbins, LLP attorneys led by William Lerach filed a consolidated class action lawsuit against Enron Corp. in the U.S. District Court in Houston. On behalf of its clients, Lerach Coughlin seeks relief for purchasers of Enron publicly traded equity and debt securities between October 19, 1998 and November 27, 2001.

Lerach Coughlin attorneys moved swiftly to freeze over $1.1 billion in illicit insider trading proceeds. Lerach Coughlin attorneys and investigators interviewed more than 100 witnesses concerning the numerous organizations within Enron, including over 3,000 related entities and partnerships. Lerach Coughlin attorneys sought expedited discovery from both Enron and Enron's auditor, Andersen. Just 24 hours after Andersen revealed it destroyed an untold number of relevant documents concerning the Enron fraud, the attorneys went back to court seeking to preserve all evidence. Lerach Coughlin attorneys' factual investigation also uncovered Enron's extensive document destruction at its Houston headquarters.

The U.S. District Court in Houston has denied a number of motions to dismiss the litigation. The parties are currently engaged in discovery and motion practice; depositions began in the summer of 2004.

Lead Plaintiff, The U.C. Regents, has reached settlements with Lehman Brothers, Bank of America, the Outside Directors, Citigroup, JP Morgan Chase and CIBC totaling over $7 billion for investors. Those settlements are subject to approval by the Court.


[edit] Trials

[edit] Trivia

 Lists of miscellaneous information should be avoided. Please relocate any relevant information into appropriate sections or articles. (December 2007)
  • The baseball stadium Enron Field in Houston, Texas, named after the company, was opened on April 7, 2000, at a game where Kenneth Lay threw out the first pitch. That game was attended by George W. Bush, who was then governor of Texas. The field was renamed to Astros Field after the collapse of Enron, to avoid negative publicity, with the Houston Astros having to pay Enron $5 million to get out of the deal. The park's name was later changed to Minute Maid Park.
  • Enron's iconic Houston headquarters, a 50-story oval glass tower at 1400 Smith Street[6], was sold for $55.5 million, far below its $93 million local tax valuation. The current sellers had bought the property for $285 million in the 1990s.[7] Enron relocated to 4 Houston Center.[8][9][10]
  • In 2002 the book Anatomy of Greed, written by Brian Cruver, is released as the first insider account of events surrounding Enron's collapse. The book and Cruver's experience were turned into the CBS television movie The Crooked E: The Unshredded Truth About Enron, starring Brian Dennehy. In 2007, The Wall Street Journal listed the book as one of the five best books about life on Wall Street, along with The Predators Ball, Liar's Poker, The Bonfire of the Vanities, and Barbarians at the Gate.[11][12][13]
  • The 2003 non-fiction book Enron: The Smartest Guys in the Room, written by Bethany McLean and Peter Elkind, was a bestseller. The book was turned into a film that was nominated for the 2005 Academy Award for Documentary Feature.[14] [15]
  • As a result of their investigation the FERC made a large portion of Enron's email database available to the public. This database comprises roughly 500,000 email messages and has become a standard dataset in email research.[16]
  • Playboy devoted photo spreads to the women of Enron,[90] and released a movie with the name Playboy: Women of Enron (2002).[91]
  • Following the collapse of Enron many ex-Enron employee bloggers (such as Thomas Duff and Ted Barlow) commentated on the ongoing scandal even while looking for new positions.
  • The movie Fun With Dick and Jane starring Jim Carrey features a plot that revolves around internal corruption in much the same form as the Enron Scandal, and this connection is in fact referenced for ironic humor in the film's final line of dialog.
  • There is an untitled film about the fall of Enron that is being developed as a starring vehicle for Leonardo DiCaprio, who will produce the film through his production company, Appian Way. It's been stated that DiCaprio will not play one of the Enron executives, but a company accountant who exposes the company's financial mismanagement. The film may be based on Kurt Eichenwald's book Conspiracy of Fools. [17]
  • The scandal was a topic on an episode of the MADtv sketch Real **********ing Talk with Dollar Bill Montgomery, where Dollar Bill Aries Spears stated that "White folks is forkin' over all their money to wack-ass Enron!" One of the guests, Cornell Walker Earthquake commented on how "Enron ain't shit. I used to send that little bastard down to the store, and he would NEVER give me my change!"

[edit] See also

See also: Timeline of the Enron scandal
Houston portal

[edit] Enron companies

[edit] Enron fallout

[edit] Corporation-related

[edit] Notes

  1. ^ "Once-mighty Enron strains under scrutiny." The New York Times (Oct 28, 2001 pBU1(N) pBU1(L) col 2 (25 col): BU1(L).
  2. ^ Gerth, Jeff, Marko, and Richard A. Oppel Jr. "Regulators struggle with a marketplace created by Enron.(Statistical Data Included)." The New York Times (Nov 10, 2001 pC1(N) pC1(L) col 2 (40 col): C1(L).
  3. ^ Gerth, Jeff, and Richard A. Oppel Jr. "Regulators struggle with a marketplace created by Enron.(Statistical Data Included)." The New York Times (Nov 10, 2001 pC1(N) pC1(L) col 2 (40 col): C1(L).
  4. ^ Banerjee, Neela. "Surest steps, not the swiftest, are propelling Dynegy past Enron." The New York Times (Nov 9, 2001 pC5(N) pC5(L) col 1 (14 col): C5(L).
  5. ^ "Skilling comes out swinging". Money/CNN. 2006-04-10. http://money.cnn.com/2006/04/10/news/newsmakers/enron_trial/index.htm. 
  6. ^ Beth McLean and Peter Elkind , Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, 2003, ISBN 1591840082
  7. ^ "Enron net rose 40% in quarter." The New York Times (July 13, 2001 pC12(L) col 4 (6 col): C12(L).
  8. ^ "Enron net rose 40% in quarter." The New York Times (July 13, 2001 pC12(L) col 4 (6 col): C12(L).
  9. ^ Oppel, Richard A., Jr, and Alex Berenson. "Enron's chief executive quits after only 6 months in job.(Jeffrey Skilling)." The New York Times (August 15, 2001 s0 pC1(N) pC1(L) col 2 (25 col): C1(L)
  10. ^ Oppel, Richard A., Jr, and Alex Berenson. "Enron's chief executive quits after only 6 months in job.(Jeffrey Skilling)." The New York Times (August 15, 2001 s0 pC1(N) pC1(L) col 2 (25 col): C1(L)
  11. ^ Oppel, Richard A., Jr, and Alex Berenson. "Enron's chief executive quits after only 6 months in job.(Jeffrey Skilling)." The New York Times (August 15, 2001 s0 pC1(N) pC1(L) col 2 (25 col): C1(L)
  12. ^ Krugman, Paul. "Enron goes overboard.(Jeffrey Skilling leaves Enron to Kenneth Lay who plans to transform the company)(Column)." The New York Times (August 17, 2001 pA21(N) pA19(L) col 6 (18 col): A19(L).
  13. ^ Krugman, Paul. "Enron goes overboard.(Jeffrey Skilling leaves Enron to Kenneth Lay who plans to transform the company)(Column)." The New York Times (August 17, 2001 pA21(N) pA19(L) col 6 (18 col): A19(L).
  14. ^ Lay, Ken. "Defending free markets.(response to August 17, 2001 article)(Letter to the Editor)." The New York Times (August 22, 2001 pA22(N) pA18(L) col 4 (4 col): A18(L).
  15. ^ Berenson, Alex. "A self-inflicted wound aggravates angst over Enron.(Statistical Data Included)." The New York Times (Sept 9, 2001 pBU1(N) pBU1(L) col 1 (15 col): BU1(L).
  16. ^ Berenson, Alex. "A self-inflicted wound aggravates angst over Enron.(Statistical Data Included)." The New York Times (Sept 9, 2001 pBU1(N) pBU1(L) col 1 (15 col): BU1(L).
  17. ^ Oppel, Richard A., Jr. "Two are promoted as Enron seeks executive stability." The New York Times (August 29, 2001 pC2(N) pC2(L) col 1 (35 col): C2(L).
  18. ^ Oppel, Richard A., Jr. "Two are promoted as Enron seeks executive stability." The New York Times (August 29, 2001 pC2(N) pC2(L) col 1 (35 col): C2(L).
  19. ^ Oppel, Richard A., Jr. "Two are promoted as Enron seeks executive stability." The New York Times (August 29, 2001 pC2(N) pC2(L) col 1 (35 col): C2(L).
  20. ^ Berenson, Alex. "A self-inflicted wound aggravates angst over Enron.(Statistical Data Included)." The New York Times (Sept 9, 2001 pBU1(N) pBU1(L) col 1 (15 col): BU1(L).
  21. ^ Berenson, Alex. "A self-inflicted wound aggravates angst over Enron.(Statistical Data Included)." The New York Times (Sept 9, 2001 pBU1(N) pBU1(L) col 1 (15 col): BU1(L).
  22. ^ "Enron reaches a deal to sell Oregon utility for $1.9 billion.(Portland General Electric to Northwest Natural Gas)." The New York Times (Oct 6, 2001 pC4(N) pC4(L) col 5 (8 col): C4(L).
  23. ^ Gilpin, Kenneth N. "Enron reports $1 billion in charges and a loss." The New York Times (Oct 17, 2001 pC5(N) pC5(L) col 1 (13 col): C5(L).
  24. ^ Norris, Floyd. "Enron tries to dismiss finance doubts.(chief brushes off conflict-or-interest doubts)". The New York Times (Oct 24, 2001 pC1(N) pC1(L) col 5 (25 col): C1(L).
  25. ^ Gilpin, Kenneth N. "Enron reports $1 billion in charges and a loss". The New York Times (Oct 17, 2001 pC5(N) pC5(L) col 1 (13 col): C5(L).
  26. ^ Gilpin, Kenneth N. "Enron reports $1 billion in charges and a loss." The New York Times (Oct 17, 2001 pC5(N) pC5(L) col 1 (13 col): C5(L).
  27. ^ Norris, Floyd. "Where did the value go at Enron. (sharp drop in stock price)." The New York Times (Oct 23, 2001 pC1(N) pC1(L) col 5 (25 col): C1(L).
  28. ^ Norris, Floyd. "Where did the value go at Enron. (sharp drop in stock price)." The New York Times (Oct 23, 2001 pC1(N) pC1(L) col 5 (25 col): C1(L).
  29. ^ Norris, Floyd. "Where did the value go at Enron. (sharp drop in stock price)." The New York Times (Oct 23, 2001 pC1(N) pC1(L) col 5 (25 col): C1(L).
  30. ^ Norris, Floyd. "Enron tries to dismiss finance doubts.(chief brushes off conflict-or-interest doubts)." The New York Times (Oct 24, 2001 pC1(N) pC1(L) col 5 (25 col): C1(L).
  31. ^ Norris, Floyd. "Enron tries to dismiss finance doubts.(chief brushes off conflict-or-interest doubts)." The New York Times (Oct 24, 2001 pC1(N) pC1(L) col 5 (25 col): C1(L).
  32. ^ Norris, Floyd. "Enron tries to dismiss finance doubts.(chief brushes off conflict-or-interest doubts)." The New York Times (Oct 24, 2001 pC1(N) pC1(L) col 5 (25 col): C1(L).
  33. ^ Norris, Floyd. "Enron ousts finance chief as S.E.C. looks at dealings." The New York Times (Oct 25, 2001 pC2(N) pC2(L) col 5 (30 col): C2(L).
  34. ^ Norris, Floyd. "Enron ousts finance chief as S.E.C. looks at dealings." The New York Times (Oct 25, 2001 pC2(N) pC2(L) col 5 (30 col): C2(L).
  35. ^ Norris, Floyd. "Enron taps all its credit lines to buy back $3.3 billion of debt." The New York Times (Oct 27, 2001 pC2(N) pC2(L) col 5 (7 col): C2(L).
  36. ^ Norris, Floyd. "Plumbing mystery of deals by Enron. (questions and answers).(Interview)." The New York Times (Oct 28, 2001 pBU13(N) pBU13(L) col 6 (18 col): BU13(L).
  37. ^ Berenson, Alex, and Richard A. Oppel Jr. "Once-mighty Enron strains under scrutiny." The New York Times (Oct 28, 2001 pBU1(N) pBU1(L) col 2 (25 col): BU1(L).
  38. ^ Berenson, Alex, and Richard A. Oppel Jr. "Once-mighty Enron strains under scrutiny." The New York Times (Oct 28, 2001 pBU1(N) pBU1(L) col 2 (25 col): BU1(L).
  39. ^ Berenson, Alex, and Richard A. Oppel Jr. "Once-mighty Enron strains under scrutiny." The New York Times (Oct 28, 2001 pBU1(N) pBU1(L) col 2 (25 col): BU1(L).
  40. ^ Berenson, Alex, and Richard A. Oppel Jr. "Once-mighty Enron strains under scrutiny." The New York Times (Oct 28, 2001 pBU1(N) pBU1(L) col 2 (25 col): BU1(L).
  41. ^ Berenson, Alex, and Richard A. Oppel Jr. "Once-mighty Enron strains under scrutiny." The New York Times (Oct 28, 2001 pBU1(N) pBU1(L) col 2 (25 col): BU1(L).
  42. ^ Oppel, Richard A., Jr. "Enron seeks additional financing.($1 to $2 billion)(National Pages)." The New York Times (Oct 29, 2001 pA8(N) pA9(L) col 6 (15 col): A9(L).
  43. ^ "Enron credit rating is cut, and its share price suffers; concern increases on borrowing capacity.(Moody's Investors Service lowers credit rating)." The New York Times (Oct 30, 2001 pC2(N) pC2(L) col 5 (10 col): C2(L).
  44. ^ Berenson, Alex. "S.E.C. opens investigation into Enron; a company fails to explain dealings." The New York Times (Nov 1, 2001 pC4(N) pC4(L) col 6 (13 col): C4(L).
  45. ^ "The rise and fall of Enron.(Editorial)." The New York Times (Nov 2, 2001 pA20(N) pA24(L) col 1 (12 col): A24(L).
  46. ^ Oppel, Richard A., Jr. "Enron's shares fall and debt rating is cut." The New York Times (Nov 2, 2001 pC11(N) pC11(L) col 1 (16 col): C11(L).
  47. ^ Oppel, Richard A., Jr, and Andrew Ross Sorkin. "Enron looks for investors, but finds them skittish; concern grows on energy trader's future." The New York Times (Nov 7, 2001 pC2(N) pC2(L) col 5 (20 col): C2(L).
  48. ^ Oppel, Richard A., Jr, and Andrew Ross Sorkin. "Dynegy is said to be near to acquiring Enron for $8 billion." The New York Times (Nov 8, 2001 s0 pC1(N) pC1(L) col 2 (25 col): C1(L).
  49. ^ Oppel, Richard A., Jr, and Andrew Ross Sorkin. "Dynegy is said to be near to acquiring Enron for $8 billion." The New York Times (Nov 8, 2001 s0 pC1(N) pC1(L) col 2 (25 col): C1(L).
  50. ^ Berenson, Alex, and Andrew Ross Sorkin. "Rival to buy enron, top energy trader, after financial fall.(Dynegy)(Statistical Data Included)." The New York Times (Nov 10, 2001 pA1(N) pA1(L) col 2 (50 col): A1(L).
  51. ^ Banerjee, Neela. "Surest steps, not the swiftest, are propelling Dynegy past Enron." The New York Times (Nov 9, 2001 pC5(N) pC5(L) col 1 (14 col): C5(L).
  52. ^ Norris, Floyd. "Does Enron trust its new numbers? It doesn't act like it.(Statistical Data Included)." The New York Times (Nov 9, 2001 pC1(N) pC1(L) col 2 (10 col): C1(L).
  53. ^ Oppel, Richard A., Jr, and Andrew Ross Sorkin. "Enron admits to overstating profits by about $600 million.(over last 5 years)." The New York Times (Nov 9, 2001 pC1(N) pC1(L) col 2 (35 col): C1(L).
  54. ^ Berenson, Alex, and Richard A. Oppel Jr. "Dynegy's rushed gamble on Enron carries some big risks." The New York Times (Nov 12, 2001 pC1(N) pC1(L) col 2 (35 col): C1(L).
  55. ^ Oppel, Richard A., Jr, and Andrew Ross Sorkin. "Enron admits to overstating profits by about $600 million.(over last 5 years)." The New York Times (Nov 9, 2001 pC1(N) pC1(L) col 2 (35 col): C1(L).
  56. ^ Oppel, Richard A., Jr, and Andrew Ross Sorkin. "Enron admits to overstating profits by about $600 million.(over last 5 years)." The New York Times (Nov 9, 2001 pC1(N) pC1(L) col 2 (35 col): C1(L).
  57. ^ Berenson, Alex, and Andrew Ross Sorkin. "Rival to buy enron, top energy trader, after financial fall.(Dynegy)(Statistical Data Included)." The New York Times (Nov 10, 2001 pA1(N) pA1(L) col 2 (50 col): A1(L).
  58. ^ Berenson, Alex, and Richard A. Oppel Jr. "Dynegy's rushed gamble on Enron carries some big risks." The New York Times (Nov 12, 2001 pC1(N) pC1(L) col 2 (35 col): C1(L).
  59. ^ Berenson, Alex, and Richard A. Oppel Jr. "Dynegy's rushed gamble on Enron carries some big risks." The New York Times (Nov 12, 2001 pC1(N) pC1(L) col 2 (35 col): C1(L).
  60. ^ Berenson, Alex. "Suitor for Enron receives approval from Wall St.(Dynegy Inc.)." The New York Times (Nov 13, 2001 pC11(N) pC13(L) col 1 (10 col): C13(L).
  61. ^ Berenson, Alex, and Richard A. Oppel Jr. "Dynegy's rushed gamble on Enron carries some big risks." The New York Times (Nov 12, 2001 pC1(N) pC1(L) col 2 (35 col): C1(L).
  62. ^ Norris, Floyd. "Gas pipeline is prominent as Dynegy seeks Enron." The New York Times (Nov 13, 2001 s0 pC1(N) pC1(L) col 5 (25 col): C1(L).
  63. ^ Berenson, Alex. "Suitor for Enron receives approval from Wall St.(Dynegy Inc.)." The New York Times (Nov 13, 2001 pC11(N) pC13(L) col 1 (10 col): C13(L).
  64. ^ Berenson, Alex. "Suitor for Enron receives approval from Wall St.(Dynegy Inc.)." The New York Times (Nov 13, 2001 pC11(N) pC13(L) col 1 (10 col): C13(L).
  65. ^ Oppel, Richard A., Jr, and Floyd Norris. "Enron chief will give up severance.(Kenneth L. Lay to give up $60.6 million in severance to show he will not profit from merger with Dynegy Inc.)." The New York Times (Nov 14, 2001 pC1(N) pC1(L) col 5 (35 col): C1(L).
  66. ^ Oppel, Richard A., Jr. "Employees' retirement plan is a victim as Enron tumbles." The New York Times (Nov 22, 2001 s0 pA1(N) pA1(L) col 2 (35 col): A1(L).
  67. ^ Norris, Floyd. "Gas pipeline is prominent as Dynegy seeks Enron." The New York Times (Nov 13, 2001 s0 pC1(N) pC1(L) col 5 (25 col): C1(L).
  68. ^ Norris, Floyd. "Did Ken Lay understand what was happening at Enron?." The New York Times (Nov 16, 2001 pC1(N) pC1(L) col 2 (15 col): C1(L). New York Times and New York Post (2000-present).
  69. ^ Oppel, Richard A., Jr. "Enron will sell some assets in hope of raising billions; shrinking to try to bolster shaky finances." The New York Times (Nov 15, 2001 pC3(N) pC3(L) col 5 (20 col): C3(L).
  70. ^ Oppel, Richard A., Jr, and Floyd Norris. "In new filing, Enron reports debt squeeze.(belated third-quarter results filing with Securities and Exchange Commission)." The New York Times (Nov 20, 2001 pC1(N) pC1(L) col 2 (25 col): C1(L).
  71. ^ Oppel, Richard A., Jr, and Floyd Norris. "In new filing, Enron reports debt squeeze.(belated third-quarter results filing with Securities and Exchange Commission)." The New York Times (Nov 20, 2001 pC1(N) pC1(L) col 2 (25 col): C1(L).
  72. ^ Oppel, Richard A., Jr. "Enron's growing financial crisis raises doubts about merger deal." The New York Times (Nov 21, 2001 s0 pA1(N) pA1(L) col 1 (20 col): A1(L).
  73. ^ Sorkin, Andrew Ross, and Riva D. Atlas. "Risks Too Great To Let Trader Just Die.(Business/Financial Desk)." The New York Times (Nov 22, 2001 pC1(L) col 02 (25 col): C1(L).
  74. ^ Norris, Floyd. "From Sunbeam to Enron, Andersen's reputation suffers.(Arthur Andersen accounting firm)(Column)." The New York Times (Nov 23, 2001 pC1(N) pC1(L) col 2 (10 col): C1(L).
  75. ^ Oppel, Richard A., Jr. "Trying to restore confidence in Enron to salvage a merger. (with Dynegy)." The New York Times (Nov 28, 2001 pC1(N) pC1(L) col 2 (25 col): C1(L).
  76. ^ Oppel, Richard A., Jr. "Trying to restore confidence in Enron to salvage a merger. (with Dynegy)." The New York Times (Nov 28, 2001 pC1(N) pC1(L) col 2 (25 col): C1(L).
  77. ^ "An implosion on Wall Street. (the collapse of Enron Corp.).(Editorial)." The New York Times (Nov 29, 2001 pA30(N) pA34(L) col 1 (11 col): A34(L).
  78. ^ "Investors pull back as Enron drags down key indexes; doubts are raised about the strength of the recent rally.(Statistical Data Included)." The New York Times (Nov 29, 2001 pC8(N) pC10(L) col 1 (10 col): C10(L).
  79. ^ Henriques, Diana B. "Market that deals in risks faces a novel one; a jolt to the freewheeling trading of energy contracts.(Enron's Collapse)(Statistical Data Included)." The New York Times (Nov 29, 2001 pC7(N) pC7(L) col 1 (20 col): C7(L).
  80. ^ Glater, Jonathan D. "A bankruptcy filing might be the best remaining choice.(Enron's Collapse)(Statistical Data Included)." The New York Times (Nov 29, 2001 pC6(N) pC6(L) col 1 (20 col): C6(L).
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  91. ^ Playboy: Women of Enron, IMDb. Last accessed January 2007.

[edit] External links

  • Forbes' list of corporate scandals.
  • BBC overview and links to information on the Enron collapse.
  • Prof. Hodak's overview of Enron scandal
  • ENRON stock certificate
  • [18] McGinley v. Bank of America, N.A., 279 Kan. 426; 109 P.3d 1146 (2005): fiduciary liability and holdings of Enron stock and "blue chip" investment.
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Corporate scandals

South Sea Company (1720) · Salad oil (1963) · Polly Peck (1990) · Bank of Credit and Commerce International (BCCI) (1990) · Barings Bank (1995) · Long-Term Capital Management (2000) · One.Tel (2001) · Enron (2001) · Adelphia (2002) · WorldCom (2002) · Tyco (2004) · Bayou Hedge Fund Group (2005) · Société Générale (2008) · Bear Stearns (2008)
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