What Was Enron? What Happened and Who Was Responsible

Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded in 1985 by Kenneth Lay and Jeffrey Skilling. Enron grew rapidly through a series of acquisitions, becoming the seventh-largest US company by market capitalization at its peak in 2001.

Enron was involved in a number of accounting scandals, which came to light in 2001 and led to its bankruptcy in December 2001. The scandal was the largest corporate bankruptcy in US history at the time. The scandal also led to the Sarbanes-Oxley Act of 2002, a major piece of legislation that was intended to improve corporate governance and prevent future corporate scandals.

The Enron scandal is often cited as an example of corporate fraud and corruption. The scandal has also been used to illustrate the need for strong corporate governance and oversight.

The Enron scandal began in 1997, when Enron began to use special-purpose entities (SPEs) to hide debt and inflate earnings. SPEs are entities that are not subject to the same accounting rules as corporations. Enron used SPEs to sell assets to third parties, but then retained control over the assets. This allowed Enron to keep the assets off its balance sheet and inflate its earnings.

In 2001, Enron's stock price began to fall as investors began to question the company's financial statements. In October 2001, Enron announced that it would restate its financial statements for the previous four years. The restatement revealed that Enron had overstated its earnings by $6 billion.

In December 2001, Enron filed for bankruptcy. The bankruptcy was the largest corporate bankruptcy in US history at the time. The scandal also led to the Sarbanes-Oxley Act of 2002, a major piece of legislation that was intended to improve corporate governance and prevent future corporate scandals.

The Enron scandal had a number of consequences. The scandal led to the loss of billions of dollars for investors and employees. It also led to the loss of confidence in the accounting profession and the financial markets. The scandal also led to the passage of the Sarbanes-Oxley Act of 2002, which was intended to improve corporate governance and prevent future corporate scandals.

The Enron scandal is a reminder of the importance of strong corporate governance and oversight. The scandal also shows that even large, successful companies can be brought down by fraud and corruption.