60 Facts About Enron scandal

Enron scandal was an accounting scandal involving Enron Corporation, an American energy company based in Houston, Texas.

Enron scandal was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth.

Enron scandal shareholders filed a $40 billion lawsuit after the company's stock price, which achieved a high of US$90.

Many executives at Enron scandal were indicted for a variety of charges and some were later sentenced to prison, including Lay and Skilling.

The resulting markets made it possible for traders such as Enron scandal to sell energy at higher prices, thereby significantly increasing its revenue.

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Enron scandal owned and operated a variety of assets including gas pipelines, electricity plants, paper plants, water plants, and broadband services across the globe.

Enron scandal gained additional revenue by trading contracts for the same array of products and services with which it was involved.

Enron scandal earned profits by providing services such as wholesale trading and risk management in addition to building and maintaining electric power plants, natural gas pipelines, storage, and processing facilities.

Enron scandal used creative accounting tricks and purposefully misclassified loan transactions as sales close to quarterly reporting deadlines, similar to the Lehman Brothers Repo 105 scheme in the 2008 financial crisis, or the currency swap concealment of Greek debt by Goldman Sachs.

However, when Skilling joined Enron scandal, he demanded that the trading business adopt mark-to-market accounting, claiming that it would represent "true economic value".

Enron scandal became the first nonfinancial company to use the method to account for its complex long-term contracts.

However, Enron scandal later expanded its use to other areas in the company to help it meet Wall Street projections.

Enron scandal continued to claim future profits, even though the deal resulted in a loss.

Enron scandal used special purpose entities—limited partnerships or companies created to fulfill a temporary or specific purpose to fund or manage risks associated with specific assets.

Enron scandal elected to disclose minimal details on its use of "special purpose entities".

In total, by 2001, Enron scandal had used hundreds of special purpose entities to hide its debt.

Enron scandal used a number of special purpose entities, such as partnerships in its Thomas and Condor tax shelters, financial asset securitization investment trusts in the Apache deal, real estate mortgage investment conduits in the Steele deal, and REMICs and real estate investment trusts in the Cochise deal.

Enron scandal disclosed to its shareholders that it had hedged downside risk in its own illiquid investments using special purpose entities.

In 1993, Enron scandal established a joint venture in energy investments with CalPERS, the California state pension fund, called the Joint Energy Development Investments .

In 1997, Skilling, serving as Enron scandal's chief operating officer, asked CalPERS to join Enron scandal in a separate investment.

However, Enron scandal did not want to show any debt from assuming CalPERS' stake in JEDI on its balance sheet.

Whitewing was used to purchase Enron scandal assets, including stakes in power plants, pipelines, stocks, and other investments.

Enron scandal capitalized the Raptors, and, in a manner similar to the accounting employed when a company issues stock at a public offering, then booked the notes payable issued as assets on its balance sheet while increasing the shareholders' equity for the same amount.

Enron scandal, using its mark-to-market accounting method, claimed a $500 million gain on the swap contracts in its 2000 annual report.

On paper, Enron scandal had a model board of directors comprising predominantly outsiders with significant ownership stakes and a talented audit committee.

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Skilling believed that if Enron scandal employees were constantly worried about cost, it would hinder original thinking.

Enron scandal established long-term fixed commitments which needed to be hedged to prepare for the invariable fluctuation of future energy prices.

Enron scandal's downfall was attributed to its reckless use of derivatives and special purpose entities.

Enron scandal's aggressive accounting practices were not hidden from the board of directors, as later learned by a Senate subcommittee.

Enron scandal's accounting firm, Arthur Andersen, was accused of applying reckless standards in its audits because of a conflict of interest over the significant consulting fees generated by Enron scandal.

Enron scandal hired numerous Certified Public Accountants as well as accountants who had worked on developing accounting rules with the Financial Accounting Standards Board .

Since the entities would never return a profit, accounting guidelines required that Enron scandal should take a write-off, where the value of the entity was removed from the balance sheet at a loss.

In one case, Andersen's Houston office, which performed the Enron scandal audit, was able to overrule any critical reviews of Enron scandal's accounting decisions by Andersen's Chicago partner.

When Enron's scandal became public, the audit committee's conflicts of interest were regarded with suspicion.

Commentators attributed the mismanagement behind Enron scandal's fall to a variety of ethical and political-economic causes.

Enron scandal made a habit of booking costs of cancelled projects as assets, with the rationale that no official letter had stated that the project was cancelled.

Enron scandal noted that outsiders had no real way of knowing the assumptions on which companies that used mark-to-market based their earnings.

Enron scandal noticed that Enron was spending much of its invested capital, and was alarmed by the large amounts of stock being sold by insiders.

Nevertheless, Lay, who was serving as chairman at Enron scandal, assured surprised market watchers that there would be "no change in the performance or outlook of the company going forward" from Skilling's departure.

Enron scandal named Mark Frevert as vice chairman, and appointed Whalley and Frevert to positions in the chairman's office.

Some observers suggested that Enron scandal's investors were in significant need of reassurance, not only because the company's business was difficult to understand but because it was difficult to properly describe the company in financial statements.

Enron scandal explained that the complexity of the business was due largely to tax strategies and position-hedging.

Enron scandal had actually experienced difficulty selling its commercial paper for a week, but was now unable to sell even overnight paper.

Enron scandal financed the re-purchase by depleting its lines of credit at several banks.

Industry analysts feared that Enron scandal was the new Long-Term Capital Management, the hedge fund whose bankruptcy in 1998 threatened systemic failure of the international financial markets.

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Sources claimed that Enron scandal was planning to explain its business practices more fully within the coming days, as a confidence-building gesture.

Enron scandal's stock was now trading at around $7, and by this time it was obvious that Enron scandal could not stay independent.

Some wondered if Enron scandal's troubles had not simply been the result of innocent accounting errors.

Additionally, many traders had limited their involvement with Enron scandal, or stopped doing business altogether, fearing more bad news.

Enron scandal acknowledged that remunerative steps would have to be taken to redress the animosity of many Enron employees towards management after it was revealed that Lay and other officials had sold hundreds of millions of dollars' worth of stock during the months prior to the crisis.

Furthermore, Enron scandal revealed in a 10-Q 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.

Dynegy now demanded Enron scandal agree to be bought for $4 billion rather than the previous $8 billion.

Enron scandal had very little cash with which to operate, let alone satisfy enormous debts.

Enron scandal was estimated to have about $23 billion in liabilities from both debt outstanding and guaranteed loans.

Enron scandal spent most of the next two days scrambling to find a bank who would take Enron's remaining cash after pulling all of its money out of Citibank.

Enron scandal was ultimately forced to make do with a small Houston bank.

The day that Enron scandal filed for bankruptcy, thousands of employees were told to pack their belongings and given 30 minutes to vacate the building.

Enron scandal attributed the main cause for the company's demise to Fastow.

Michael W Krautz, a former Enron accountant, was among the accused who was acquitted of charges related to the scandal.

Between December 2001 and April 2002, the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services held multiple hearings about the Enron scandal and related accounting and investor protection issues.