Kenneth L. Layand and Jeffrey K. Skilling, the chief executives who guided Enron through its spectacular rise and even more stunning fall, were found guilty on May 25, 2006, of fraud and conspiracy (Barrionuevo, 2006). The Enron Corporation was an American Energy, economic goods, and services company based in Houston, Texas. Enron was founded in 1985 as a combination of InterNorth and Houston Natural Gas. Fortune, an American multinational business magazine, named Enron “America’s Most Innovative Company’ for six consecutive years. At Enron’s peak, its shares were worth $90.75; when the firm declared bankruptcy on December 2, 2001, the company was trading at $0.26 (Segal, 2019). Enron’s leadership mislead regulators with fake holdings and off-the-books accounting practices. The once most innovative company used special purpose vehicles (SPVs), or special purpose entities (SPEs), to conceal its enormous debt and toxic assets from creditors and investors. Also, the firm was found to be guilty of obstructing justice for shredding Enron’s financial documents to conceal them from the SEC. Due to the Enron scandal, in July 2002, President George W. Bush signed into law the Sarbanes-Oxley Act. The Act intensified the consequences for altering, destroying, or fabricating financial statements, and for trying to defraud shareholders.
Barrionuevo, A. (2006, May 25). Enron Chiefs Guilty of Fraud and Conspiracy. Retrieved June 28, 2019, from https://www.nytimes.com/2006/05/25/business/25cnd-enron.html
Segal, T. (2019, May 29). Enron Scandal: The Fall of a Wall Street Darling. Retrieved June 28, 2019, from https://www.investopedia.com/updates/enron-scandal-summary/