On December 2, 2001 Enron Corporation filed for chapter 11 bankruptcy, which was the largest bankruptcy petition in U.S. history. It had cleared out shareholder investments that had once been valued at more than $60 billion. Many of Enron's employees had large amounts of Enron stock in the company's retirement savings plans. As a result, they saw the value of their retirement savings first expand dramatically and then fall even faster after the Enron scam started. The names Arthur Anderson and Enron are two big names in the Utility and accounting industries, and are known throughout the world, they took advantage of not only investors but also the government and public as a whole, so the individuals involved can increase their personal wealth.
Mr. Skilling has made a major mistake with the Enron Company. He lost the company about $5 billion in money-losing investments from Utility projects. The Enron Corporation was built on fraudulent and misleading financial reporting and "aggressive" accounting practices.
This was designed to increase the share price. While Enron had a huge trading business it was the largest energy trader in North America. Enron also may have inflated its profits by lumping sales of assets, such as pipelines into its trading business. During the summer of 2001, vice president Sherron Watkins was attempting to find assets to sell to help Enron's financial picture. She ran into off the books arrangements and the downward spiral began in the last fall of 2001.
The accounting firm Arthur Anderson LLP (limited liability partnership) was first established in 1913. Over the years it grew to become one of the largest accounting firms in the world. During the 1980's the tension between the accounting division and the profitable consulting division became increasingly smaller. Anderson split its accounting and consulting sides into two...