...An Enron Jury Free of Grudges? Easy, Judge Says! HOUSTON, Jan. 29, 2006 Chances are that in this city's pool of 2.3 million registered voters, there are at least 16 people who are not angry about the implosion of Enron, the largest business collapse in history. But finding them in a single day could be a challenge.! That has not deterred Judge Simeon T. Lake III of Federal District Court, who will begin the much-anticipated criminal trial of the former Enron chief executives Kenneth L. Lay and Jeffrey K. Skilling on Monday.! Judge Lake said in court on Thursday that he expected to choose a panel of 12 jurors and 4 alternates from 100 prospective members in one day. After examining responses to the jury questionnaires, Judge Lake indicated that he felt they did not show evidence of prejudice against the defendants. "I've been impressed by the apparent lack of bias or influence from media exposure," he said.! The lawyers defending Mr. Lay and Mr. Skilling have contended for months that finding impartial jurors in Houston would be difficult, if not impossible. But the judge has rejected two requests to move the trial outside of Houston, where Enron was based, and has repeatedly denied pleas by the defense lawyers to allow them to question individual jurors during the final selection process, called voir dire.! The defense lawyers say they are deeply troubled by responses to jury questionnaires, which came back with mostly negative comments about Enron and the defendants. Many Houstonians...
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...MBA 6070X – Ethics & Law Essay 2 February 2015 Enron - Ethics & Law Essay Introduction: Enron Corporation was an American energy company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000 employees and was one of the largest electricity, natural gas, paper, and communication companies, with overall revenues of nearly $101 billion in 2000. The company developed, built and operated power plants and pipelines while dealing with rules of law and various infrastructures worldwide. In just 15 years, Enron grew into one of America’s largest companies and leading magazine “Fortune†named Enron “America’s Most Innovative Company†for six consecutive years. Enron divided its business into three main areas: (I) Enron Wholesale, (II) Enron Energy Service, and (III) Enron’s Global Asset. Enron wasn’t focusing to specific industry strategies. Rather, it has an overall strategy that calls for creating an environment and culture of creativity and idea generation. “Enron is a laboratory of innovation. Enron’s entrepreneurial approach calls for new insights, new ways of looking at problems and opportunities. Enron has an exceptional ability to leverage its intellectual capital. Individuals are empowered to do what they think is best. Enron’s philosophy is not to stand in the way of our employees. This environment spurs the innovation that enables Enron to revolutionize traditional energy markets and successfully enter...
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...Enron Scandal: Who did what? What went down between Fastow, Lay, Skilling, and Causey? Dillon Benjamin Lock Haven University Enron operated one of the largest natural gas transmission networks in North America, totaling over 36,000 miles (Frontain, 2002 p. 1). The company was formed in 1985 when InterNorth purchased Houston Natural Gas (McLeon, 2013, p. 1). According to Frontain (2002), “Enron managed the world’s largest portfolio of natural gas risk management contracts and pioneered innovative trading products” (p. 1). By the year of 2000 Enron was the 7th largest corporation in the United States” (McLeon, 2013, p. 1). That is who and what Enron was before everything came crashing down. Enron employed sketchy and misleading accounting practices to hide its financial losses (McLeon, 2013, p. 1). Under Jeffrey Skilling the trading operation adopted market-to-market accounting in which the present value of anticipated revenue is realized and the expected costs of fulfilling the contract are expensed once a contract is signed (Frontain, 2002, p. 2). Enron got into trouble in 2001 when Arthur Anderson, Enron’s outside auditor, correctly accounted one partnership deal that created severe quarterly losses (Frontain, 2002, p. 2). According McLeon (2013), “Those losses and subsequent profit and debt restatements caused Enron's stock price to drop, triggering the unraveling of the partnership and resulting in a sudden and dramatic financial collapse. This event led them into...
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...THE COLLAPSE OF ENRON & THE INTRODUCTION OF THE SARBANES OXLEY ACT BY TREVOR GARRETT 02/25/2011 Abstract Enron Corporation was one of the largest energy trading, natural gas and Utilities Company in the world that was based in Huston, Texas. The downfall of Enron is one of the most infamous and shocking events in the financial world, and its reverberations were felt around the globe. Prior to its collapse in 2001, Enron was one of the leading companies in the U.S and considered among top 10 admired corporations and most desired places to work at. Its revenues made up US $139 to $184 billion, assets equaled $62 to $82 billion, and the number of employees reached more than 30,000 people in 20 countries around the world. While on the surface it seemed like the perfect Corporation, internally it had highly decentralized financial control and decision-making structure, which made it practically impossible to get coherent and clear view on corporations' activities and operations. Enron manipulated its books and assets to help it report steady profit growth to Stock Exchanges and Credit-rating agencies. Investors generally are not willing to pay as much for the stock of a volatile trading operation, and this gave rise to manipulations. This paper briefly describes the legal and ethical breaches by Enron, the key factors and events that led to its collapse and the passing of the Sarbanes Oxley Act as a consequence of such a catastrophe. The paper also discusses the key components...
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...The Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is a federal agency that provides protection for investors and regulates the bulk of the securities industry including: U.S. stock exchanges, options markets, and other electronic exchanges and securities markets. The Securities Exchange Act of 1934 created the laws that regulated it. The Securities Exchange Act of 1934 is a law governing the secondary trading of securities in the U.S. The commission's division of enforcement investigates possible violations of federal securities related laws and can take civil action with other law enforcement agencies when it comes to criminal cases. The market crash of 1929 and subsequent Great Depression took a toll on the public's trust in capital markets. Investors looking to go from rags to riches turned to the stock market during the roaring 20s. According to the SEC, an estimated $50 billion in new securities were offered, and half became worthless. Congress passed the Securities Act of 1933 and The Securities Exchange Act of 1934 (which created the SEC) in an effort to restore confidence in the markets. Publicly traded companies were now obligated to disclose investment risks and provide full information about the state of their business. Brokers, dealers and exchanges were now legally required to put the interests of the investors first and treat them in a fair and honest manner. Congress established the SEC to enforce these laws for the sake...
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...recent years has evolved drastically and greater accountability and consequences have been issued to corporations. In the United States authorities made many headlines with companies who practiced fraudulent activities, such as Enron, to serve as a warning to those who dare break rules in the future. The Organization Enron, According to (Eichenwald, 2006), was a U.S. energy-trading and utilities company that housed one of the largest accounting frauds in history. The company was based in Houston, Texas. Enron employed about 20,000 people and was the world’s largest natural gas, electricity, communications and pulp and paper company. As reported by Fortune.com, Enron had revenues of nearly $101 billion during year 2000. Fortune also named Enron “America’s Most Innovative Company” for six consecutive years. Accounting Ethical Breach Enron’s downfall, and the imprisonment of several of its leadership group, was one of the most shocking and widely reported ethics violations of all time as stated by (Silverstein, 2013). It not only bankrupted the company but also destroyed Arthur Anderson, one of the largest audit firms in the world. The Securities and Exchange Commission (SEC) announced in 2001 that it was investigating the accounting practices of Enron after several years of questions raised...
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...UNITED STATES Syllabus SKILLING v. UNITED STATES CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 08–1394. Argued March 1, 2010—Decided June 24, 2010 Founded in 1985, Enron Corporation grew from its headquarters in Houston, Texas, into the seventh highest-revenue-grossing company in America. Petitioner Jeffrey Skilling, a longtime Enron officer, was Enron’s chief executive officer from February until August 2001, when he resigned. Less than four months later, Enron crashed into bankruptcy, and its stock plummeted in value. After an investigation uncovered an elaborate conspiracy to prop up Enron’s stock prices by overstating the company’s financial well-being, the Government prosecuted dozens of Enron employees who participated in the scheme. In time, the Government worked its way up the chain of command, indicting Skilling and two other top Enron executives. These three defendants, the indictment charged, engaged in a scheme to deceive investors about Enron’s true financial performance by manipulating its publicly reported financial results and making false and misleading statements. Count 1 of the indictment charged Skilling with, inter alia, conspiracy to commit “honest-services” wire fraud, 18 U. S. C. §§371, 1343, 1346, by depriving Enron and its shareholders of the intangible right of his honest services. Skilling was also charged with over 25 substantive counts of...
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...multinational, while governments remain national. Big companies are so financially powerful that governments are afraid to take them on. It is very important to study the cause and the possible solution for the increase in numbers of white collar crime; our focus needs to shift from Blue Collar Crimes to White Collar Crimes. U.S.A spends nearly $50 billion on fighting Blue Collar Crimes, not even quarter of that amount is spent on fighting White Collar Crimes. Hardly a day passes without a new story of malfeasance. Every Wall Street firm has paid significant fines during the past decade for phony accounting, insider trading, securities fraud, Ponzi schemes, or outright embezzlement by CEOs. A massive insider-trading ring is currently on trial in New York, and has implicated some leading financial-industry figures. And it follows a series of fines paid by America’s biggest investment banks to settle charges of various securities violations. They are essentially "paper crimes" in which the perpetrator uses deceit to obtain money, property or some professional advantage. White collar crime encompasses a number of offenses including mail fraud,...
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...Two weeks into the trial of Enron founder Kenneth Lay and former chief executive Jeffrey Skilling, the defense's strategy so far has been clear: Undermine the credibility of the government's witness and barrage the jury with a deluge of complicated and, sometimes, mind-numbing corporate conference calls in an effort to show the defendants were unaware of any corporate chicanery at the company. Skilling gets 24 years Lessons from Enron: Just say 'sorry' Meet the players It's a strategy that defense teams have widely used in the recent corporate trials ranging from HealthSouth (Research) to WorldCom with mixed results. But with Enron -- the granddaddy of all cases of corporate malfeasance -- Lay and Skilling's dynamic duo of defense attorneys, Houston-based Michael Ramsey and Los Angeles-based Daniel Petrocelli, are taking their defense one step further. The attorneys contend that not only were the defendants unaware of any wrongdoing but, with the exception of a few bad apples, Enron never committed any fraud. They blame negative publicity, courtesy of the former CFO Andrew Fastow's questionable side deals, and a lack of market confidence in the post-bubble environment for the company's implosion in December 2001 -- an event that sparked billions of dollars in losses for investors and paved the way for a slew of corporate scandals. A brilliant but risky defense "It's a tough thing to sell," he said. "If the prosecutors can prove the fraud occurred and the defense lawyer insists...
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...chak de phattey The Call for Participation for Wikimania 2009 has been released. Submit your presentations before April 15. [Hide] [Help us with translations!] Enron scandal From Wikipedia, the free encyclopedia Jump to: navigation, search Enron Corporation Type Defunct / Asset-less Shell Founded Omaha, Nebraska, 1985 Headquarters Houston, Texas, United States Key people Kenneth Lay, Founder, former Chairman and CEO Jeffrey Skilling, former President, CEO and COO Andrew Fastow, former CFO Rebecca Mark-Jusbasche, former Vice Chairman, Chairman and CEO of Enron International Stephen F. Cooper, Interim CEO and CRO John J. Ray, III, Chairman Industry formerly Energy Revenue $101 billion (in 2000) Employees approx. 22,000 in 2000 approx. 4 as of 2008. Website http://www.enron.com/ The Enron scandal was a financial scandal involving Enron Corporation (former NYSE ticker symbol: ENE) and its accounting firm Arthur Andersen, that was revealed in late 2001. After a series of revelations involving irregular accounting procedures conducted throughout the 1990s, Enron was on the verge of bankruptcy by November 2001. A white knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable. Enron filed for bankruptcy on December 2, 2001. As the scandal was revealed, Enron shares dropped from over US$90.00 to less than 50¢. Enron's plunge occurred after revelations that much of its profits and revenue were the result of deals with special...
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...A new strategy Enron was the biggest seller of natural gas in North America in 1992, their EBIT was 122 million dollar. Enron used differentiation strategy which aimed to develop and operated with different assets such as pipelines, services, paper plants, water plants and electricity plants. Enron did not just make profit on its assets but also traded with contracts of the assets and service in order to reach higher profit. This is how Enron became a favourite among investors in the ‘90s and its stock price increased 311%. The growth did not stop until the year of 2000. Enron’s market value was above 60 billion dollars and its stock price was 83,13 dollars the 31 December of 2000. The Commodity Futures Modernization Act of 2000 helped them with their derivatives businesses. “One example was during the California electricity crisis (2000-2001) where they manipulated the California energy market and sent electricity prices surging by at least a factor of eight. During that time, the price of natural gas was trading as much as $60 per thousand cubic feet in California (which was previously selling for about $3 per thousand cubic feet). This kind of manipulation increased Enron's stock price and revenues. But this not so clever manipulation of Enron made itself a political target and accelerated the ruins of their finances.” Enron’s downfall Mark-to-market Accounting The use of mark-to-market accounting later struck back. The Enron’s aggressive accounting had corrupted...
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...Baluyot, Krishia Mae E. BSAV-2A Scandals that Rocked the Accounting World ❖ Enron Scandal The Enron Corporation led to bankruptcy Last October 2001. It is an American energy company based in Huston, Texas, and the termination of Arthur Andersen, which was one of the biggest audit and accountancy partnerships in the world. Enron is also attributed as the biggest audit failure. Enron was founded in 1985 by Kenneth Lay after merging Houston Natural Gas and Inter North several years later. When Jeffrey Skilling was hired, he developed a staff of executive that, with the use of accounting loopholes special purpose entries, and poor financing reporting, were able to hide billions in debt from failed deals and projects. Shareholders lost nearly $11 billion when Enron's stock price, which hit a high of US$90 per share in mid-2000, plummeted to less than $1 by the end of November 2001. The U.S. Securities and Exchange Commission (SEC) began an investigation, and rival Houston competitor Dynegy offered to purchase the company at a fire sale price. The deal fell through, and on December 2, 2001, Enron filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Enron's $63.4 billion in assets made it the largest corporate bankruptcy in U.S. history until WorldCom's bankruptcy the following year. Many executives at Enron were indicted for a variety of charges and were later sentenced to prison. Enron's auditor, Arthur Andersen, was found guilty...
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...Enron - Were they the Crookedest Guys in the Room? The Rise of the Big "E" In May 1985, InterNorth Incorporated and Houston Natural Gas announced that they would merge. Their combined value was an estimated $2.3 billion. These firms were two of the largest gas pipeline companies in the United States. As part of the negotiations, the chairman and CEO of InterNorth, Sam Segnar, would be the head of the new entity until January 1, 1987, when the chairman and CEO of Houston Natural Gas, Kenneth Lay, would take over. The new company was initially called HNG/lnterNorth and later was renamed Enron.' Lay's first choice for the new name of the company was “Enteron,” but that was scrapped just days before it was announced to the public when Lay learned that enteron was the name for the digestive tract. In 1990, Lay created a division of Enron called Enron Finance Corporation and hired Jeffrey Skilling to run the company. Skilling had been an accounting consultant to Enron through the firm of McKinsey & Company. Lay was so impressed with the accounting systems that Skilling developed for Enron that he custom-tailored the lead position at Enron Finance Corporation for him. By 1995, Enron had become the largest independent natural gas company in the United States. In 1996, Andrew Fastow, Enron's chief financial officer and one of the key players in Enron's downfall, was almost fired from Enron when he did an unsatisfactory job of managing a retail unit of Enron that competed...
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...MBA 6070X – Ethics & Law Essay 2 February 2015 Enron - Ethics & Law Essay Introduction: Enron Corporation was an American energy company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000 employees and was one of the largest electricity, natural gas, paper, and communication companies, with overall revenues of nearly $101 billion in 2000. The company developed, built and operated power plants and pipelines while dealing with rules of law and various infrastructures worldwide. In just 15 years, Enron grew into one of America’s largest companies and leading magazine “Fortune†named Enron “America’s Most Innovative Company†for six consecutive years. Enron divided its business into three main areas: (I) Enron Wholesale, (II) Enron Energy Service, and (III) Enron’s Global Asset. Enron wasn’t focusing to specific industry strategies. Rather, it has an overall strategy that calls for creating an environment and culture of creativity and idea generation. “Enron is a laboratory of innovation. Enron’s entrepreneurial approach calls for new insights, new ways of looking at problems and opportunities. Enron has an exceptional ability to leverage its intellectual capital. Individuals are empowered to do what they think is best. Enron’s philosophy is not to stand in the way of our employees. This environment spurs the innovation that enables Enron to revolutionize traditional energy markets and successfully enter...
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...Sarbanes Oxley: An Antidote To Executive Greed? | May2011 | “Today I sign the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt. This new law sends very clear messages that all concerned must heed. This law says to every dishonest corporate leader: you will be exposed and punished; the era of low standards and false profits is over; no boardroom in America is above or beyond the law”- George W. Bush | | INTRODUCTION Since the initial separation of corporate ownership from corporate management, the abuse of power by management has been a concern. Early in the last century a small number of Industrialists owned and controlled the major corporations. Slowly, as these individuals aged and retired, their vast holdings were transferred to a large number of decedents who were, for the most part, disinterested in managing the firms in which they held an ownership share. The shareholders relied on experienced managers to direct their corporations. This transfer of power gave rise to agency problems wherein the agent of the organization (manager) is likely to place their own interest above those of the actual owners of the firm. There is a vast body of literature addressing the issues of agency problems and clearly defined Agency Theory to which the majority of scholars subscribe (Van Ness, Miesing, and Kang, 2009) The original attempt to create an antidote to agency problems was the formation of corporate boards of directors...
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