A) What happened during the Enron case? What lead to the collapse of Enron? -Ken Lay (Founder and CEO), Jeffrey Skilling (CEO) and Andy Fastow (CFO) found that Enron wasn't making money so what they did is implemented along with the approval of Arthur Andersen the "future value accounting." This type of accounting was to predict the future profit that Enron was going to make and list it as part of there future profit to the shareholders. -This creative accounting lead to create "outside companies" that were directly involved with Enron to hide the losses the companies made. -As Enron announced big numbers to Wall Street, people began to take notice of this company and started to buy shares of the company. Enron even encouraged their employees to buy shares of Enron and the price of Enron was going up to as high as $90. -As Enron got bigger, the company was collecting more losses and hiding them well. Things were getting so bad, Enron created the California Energy Crisis. -Enron hit the top when their stock hit $90 and then things were starting to fall apart. -Lay, Skilling and Fastow began to dump their shares of Enron, and continues to persuade the employees to buy shares of Enron. -In the end, employees lost their entire retirement funds. They couldn't get access to sell their Enron stock while the executives were cashing out their shares. A Vice President of the company exposed the company accounting scandals. 20,000 employees were laid off .
-Its trading operations relied heavily on complicated transactions, many relating to deals many years in the future. - Enron devices for keeping debts off the balance sheet and thus keeping profits high and shareholders happy. -Many of the company's executives allegedly raked in massive profits by selling their shares before the company's problems went public and its stock price collapsed. -After a while the losses were being shuttled around corners of the empire to keep them hidden, eventually coming to light in...
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