Enron Scandal
Enron Scandal
In 1985, Enron was formed by Kenneth Lay after the merging of Houston Natural Gas and InterNorth. In the 1990s, Lay helped to initiate the selling of electricity at market prices. Markets made it easier for Enron to sell energy at higher prices, which caused the company to get richer. Enron was the largest merchant of natural gas in 1992. In November 1999, the creation of EnronOnline enabled Enron to develop, negotiate and manage its trading business. By 2001, Enron became a multinational company that owned and operated gas pipelines, pulp and paper plants, broadband assets, electricity plants, and water plants. Enron used Wall Street to transform energy supplies into financial instruments that could be traded online like stocks and bonds, these contracts would guarantee their customers a steady supply at expected prices, they introduced supply and demand to the energy industry, it was supposed to be good for the customer. They got so bigheaded which created an insurance risk, it was a complete failure. Enron began to hide their bad business practices. The Enron Scandal happened in October 2001, it led to the bankruptcy of the Enron Energy Company which also led to the termination of Arthur Andersen, one of the largest audits and accounting partnerships in the world, it became known as the biggest audit failure in American History. Billions of dollars were hidden in debts from bad deals and projects due to accounting loopholes, special purpose partnerships and poor financial reporting. Faking their records, allowed Enron to look like they were growing and gainful therefore fascinated more investors. By the time the investors found out what was really going on they were broke and lost everything. Shareholders lost nearly $11 billion dollars when Enron stock price hit a high of $90 per share; this is when the U.S. Securities and Exchange Commission began to investigate. Dynegy, an electric utility company tried to buy Enron at a
In 1985, Enron was formed by Kenneth Lay after the merging of Houston Natural Gas and InterNorth. In the 1990s, Lay helped to initiate the selling of electricity at market prices. Markets made it easier for Enron to sell energy at higher prices, which caused the company to get richer. Enron was the largest merchant of natural gas in 1992. In November 1999, the creation of EnronOnline enabled Enron to develop, negotiate and manage its trading business. By 2001, Enron became a multinational company that owned and operated gas pipelines, pulp and paper plants, broadband assets, electricity plants, and water plants. Enron used Wall Street to transform energy supplies into financial instruments that could be traded online like stocks and bonds, these contracts would guarantee their customers a steady supply at expected prices, they introduced supply and demand to the energy industry, it was supposed to be good for the customer. They got so bigheaded which created an insurance risk, it was a complete failure. Enron began to hide their bad business practices. The Enron Scandal happened in October 2001, it led to the bankruptcy of the Enron Energy Company which also led to the termination of Arthur Andersen, one of the largest audits and accounting partnerships in the world, it became known as the biggest audit failure in American History. Billions of dollars were hidden in debts from bad deals and projects due to accounting loopholes, special purpose partnerships and poor financial reporting. Faking their records, allowed Enron to look like they were growing and gainful therefore fascinated more investors. By the time the investors found out what was really going on they were broke and lost everything. Shareholders lost nearly $11 billion dollars when Enron stock price hit a high of $90 per share; this is when the U.S. Securities and Exchange Commission began to investigate. Dynegy, an electric utility company tried to buy Enron at a
Cited: Retrieved from, http://www.cbc.ca/news/business/the-rise-and-fall-of-enron-a-brief- history-1.591559 Retrieved from, http://www.britannica.com/EBchecked/topic/1517868/Enron-What- Happened-Year-In-Review-2002