The Downfall of Enron, the Darling of American Business

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Enron, once the darling of American businesses, was named “America’s Most Innovative Company” for six consecutive years by Fortune. This lofty image was, however, quickly tarnished and the company eventually filed for bankruptcy. Over the next few pages I will discuss who and how this Fortune 500 Company went from great to late. There are a few key players involved in this scandal that should be highlighted. First, is the founder Kenneth Lay. Lay was the chairman and Chief Executive Officer at Enron until the promotion of Jeffrey Skilling in February of 2001. It was under the management of Skilling that Enron began using ‘mark to market accounting’, defined as “when the value of an asset is updated to its current market levels,” meaning Enron estimated profits from future deals. This strategy helped make Enron one of the biggest gas and electricity wholesalers. Skilling did not last long as the CEO of Enron as he resigned in August of 2001, while also selling large amounts of his shares in the company. Another major contributor to this scandal was Chief Financial Officer, Andrew Fastow. Fastow was the key component to helping the Enron executives gather all this money from the company. David Duncan was another major factor that allowed this scandal to happen. Duncan was Enron’s chief auditor at Arthur Anderson, an accounting firm that provided auditing services. TRANSITION The motivation for these actions is clearly greed. Kenneth Lay was solely concerned on how to gain more money. He is said to have liquidated upwards of $300 million of stock invested in Enron and as the share price of Enron started to fall, Lay sold large amounts of stock. Skilling and Fastow, like lay were also into the scam for personal wealth. Skilli... ... middle of paper ... ...h will “protect shareholders and the general public from accounting errors and fraudulent practices in the enterprise. The act is administered by the Securities and Exchange Commission, which sets deadlines for compliance and publishes rules on requirements.” The Bush administration was also looked into, as Enron assisted his running for presidency with cash donations. Works Cited http://www.biography.com/people/kenneth-lay-234611 http://www.biography.com/people/andrew-fastow-234605 http://useconomy.about.com/od/glossary/g/mark_to_market.htm http://finance.laws.com/enron-scandal-summary http://www.nytimes.com/2002/01/26/opinion/enron-for-dummies.html http://money.howstuffworks.com/cooking-books7.htm http://bizfinance.about.com/od/smallbusinessfinancefaqs/a/sarbanes-oxley-act-and-enron-scandal.htm http://searchcio.techtarget.com/definition/Sarbanes-Oxley-Act

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