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Enron scandal

Enron scandal involved accounting fraud at Enron Corporation.

The Enron scandal was a major accounting scandal at Enron Corporation, leading to bankruptcy in 2001. Executives used loopholes to hide debt, leading to a $40 billion lawsuit. Enron's bankruptcy was the largest in U.S. history at the time. Executives faced charges, with some sentenced to prison. The scandal led to new regulations like the Sarbanes–Oxley Act to improve financial reporting accuracy.

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Related

Watergate scandalAlan GreenspanEdward SnowdenAsian Financial CrisisJ.P. Morgan & Co.European Debt CrisisGlobal Financial CrisisBen BernankeDeloitteAl Gore

Timeline

1989
Enron starts trading natural gas commodities
In 1989, Enron initiates trading in natural gas commodities, eventually growing to become the largest natural gas merchant in North America and the United Kingdom.
1993
Enron signs agreement with Maharashtra government for power plant construction
In 1993, Enron and the government of Maharashtra, India, finalize an agreement to construct a significant power plant with an estimated cost of $2.8 billion.
1996-01-08
Enron and Maharashtra Government Agreement
On January 8, 1996, Enron and the government of Maharashtra reached a new agreement to shift some construction costs and reduce electricity tariffs.
1997-12
Formation of Whitewing Associates L.P.
In December 1997, Whitewing Associates L.P. was formed with funding from Enron and an outside investor. It was used as a special purpose entity to purchase Enron assets and was later changed to no longer be consolidated with Enron.
1998
Andrew Fastow becomes Enron's CFO
In 1998, Andrew Fastow was promoted to the position of chief financial officer (CFO) at Enron. He played a key role in developing strategies to mask the company's mounting liabilities and portray a false image of financial health.
1999-05-24
Tim Belden conducts the Silverpeak Incident
On May 24, 1999, Tim Belden, the head of Enron's West Coast Trading Desk, initiates the Silverpeak Incident by manipulating power lines in California's deregulated energy market to influence electricity prices.
1999-09-16
Enron's CFO Andy Fastow addresses Merrill Lynch in World Trade Center
On September 16, 1999, Enron's CFO Andy Fastow spoke to Merrill Lynch at the World Trade Center, seeking investors for his LJM2 Fund and assuring them of his favor towards LJM in case of conflict with Enron.
2000-01-19
Annual Analysts Meeting
The first day of the Annual Analysts Meeting at Enron where Skilling praises the performance of Enron Energy Services. The second day sees the introduction of Enron's Broadband plan and a visit from Scott McNealy of Sun Microsystems, leading to a 26% increase in stock price.
2000-12-13
Jeffrey Skilling to become Enron's chief executive in February
On December 13, 2000, Enron announces that Jeffrey Skilling will take over as chief executive in February, replacing Kenneth Lay.
2001-01-22
Skilling's Quarterly Analyst Conference Call
During the Quarterly Analyst Conference Call on January 22, 2001, Skilling expressed great optimism and used positive terms like 'outstanding,' 'fantastic,' and 'tremendous.'
2001-02-21
Skilling's statement at Employee Meeting
On February 21, 2001, Enron's CEO Jeff Skilling referred to Enron as a 'black box' that was growing the wholesale business significantly, setting the goal of becoming 'The World's Leading Company'.
2001-07-13
Skilling's Resignation Announcement
On July 13, 2001, Skilling expressed his desire to resign to Lay. Lay asked Skilling to take the weekend to reconsider. Conflicting views emerged regarding the events of the day, with Lay claiming he tried to dissuade Skilling from resigning.
2001-08-22
Sherron Watkins meets with Lay
Sherron Watkins, an Enron vice president, meets with Enron's CEO, Lay, and expresses concerns about Enron's accounting practices by giving him a letter suggesting that Enron might be an 'elaborate hoax'.
2001-10-16
Enron Reports Third-Quarter Loss
On October 16, 2001, Enron reported a significant $618 million loss for the third quarter and disclosed a $1.01 billion non-recurring charge related to operations overseen by CFO Andrew Fastow. CEO Lay also announced a $1.2 billion reduction in shareholder equity.
2001-10-22
Enron acknowledges SEC inquiry into conflict of interest
Enron publicly admits that the Securities and Exchange Commission is looking into a potential conflict of interest concerning the company's transactions with certain partnerships.
2001-11-08
Enron revises financial statements
Enron files documents with SEC revising its financial statements for the past five years to account for $586 million in losses. The company also starts negotiations to sell itself to Dynegy to avoid bankruptcy.
2001-11-09
Dynegy agrees to buy Enron
Dynegy agrees to buy Enron for about $9 billion in stock and cash.
2001-11-19
Enron restates third quarter earnings
Enron restates its third quarter earnings and discloses it is trying to restructure a $690 million obligation that could come due on Nov. 27.
2001-11-28
Enron shares plunge below $1
On November 28, 2001, the stock value of Enron dropped below $1, indicating a significant financial crisis for the company.
2001-11-29
Dynegy withdraws from the deal
On November 29, 2001, Dynegy decided to back out of a deal involving Enron, further exacerbating the financial troubles faced by Enron.
2001-11-30
Enron files for bankruptcy
Enron, facing insurmountable liquidity issues and dwindling business, filed for Chapter 11 protection on November 30, 2001. This marked the largest bankruptcy in U.S. history at that time, resulting in significant financial losses for creditors, employees, and stockholders.
2001-12-02
Enron files for Chapter 11 bankruptcy protection
Enron filed for Chapter 11 bankruptcy protection on December 2, 2001, marking the largest bankruptcy case in the history of the United States at that time.
2002-01-09
Justice Department starts criminal investigation of Enron
On January 9, 2002, the U.S. Justice Department initiated a criminal investigation into Enron, looking into the financial misconduct and fraud within the company.
2002-01-10
Arthur Andersen employees destroy Enron-related documents
Arthur Andersen employees in Houston admitted to destroying documents linked to Enron on January 10, 2002, raising suspicions of cover-up and collusion.
2002-01-23
Lay resigns as chairman and CEO of Enron
On January 23, 2002, Kenneth Lay stepped down from his positions as chairman and CEO of Enron amidst the escalating scandal and financial collapse of the company.
2002-01-25
Cliff Baxter commits suicide
On January 25, 2002, Cliff Baxter, a former vice chairman of Enron, tragically takes his own life.
2002-02-02
The Powers Report on Enron's collapse
The Powers Report, released on February 2, 2002, is a comprehensive 218-page summary of an internal investigation into Enron's downfall, attributing blame to self-dealing executives and negligent directors.
2002-08-21
Michael Kopper Pleads Guilty to Conspiracy
Michael Kopper admitted to participating in wire fraud and money laundering schemes, funneling large sums of money to Fastow and agreeing to assist investigators. This marked a significant development in the Enron scandal.
2002-08-31
Arthur Andersen Surrenders License
Arthur Andersen relinquished its accounting license in the US, resulting in a massive loss of jobs for 85,000 employees and a significant decline in annual earnings. This event had far-reaching consequences in the financial world.
2002-10-31
Indictment of Andy Fastow on 78 Counts of Fraudulent Conduct
On October 31, 2002, Andy Fastow was charged with 78 counts of fraudulent behavior.
2003-07-11
Enron files reorganization plan in bankruptcy case
On July 11, 2003, Enron submitted a reorganization plan in its bankruptcy case, stating that most creditors would only receive about one fifth of the $67 billion they were owed. The initial estimated debt of $67 billion was later revised to $66.4 billion.
2003-09-10
Enron's former treasurer Ben Glisan pleads guilty to conspiracy
On September 10, 2003, Ben Glisan, the former treasurer of Enron, admits to one count of conspiracy, becoming the first former Enron executive to be imprisoned. This marks a significant development in the Enron scandal.
2004-03-09
Release of 'Power Failure'
On March 9, 2004, Mary Swartz and Sherron Watkins released 'Power Failure: The Inside Story of the Collapse of Enron.' The book provides an insider perspective on the events that led to the collapse of Enron.
2004-07-30
Ken Rice pleads guilty to securities fraud
On July 30, 2004, Ken Rice, former co-CEO of Enron Broadband Services, pleads guilty to a single count of securities fraud.
2005-01-07
U.S. Supreme Court agrees to consider overturning conviction of Arthur Andersen accounting firm
On January 7, 2005, the U.S. Supreme Court decides to review the conviction of the Arthur Andersen accounting firm for obstructing justice by destroying Enron-related documents.
2005-02-25
Fraud and conspiracy trial of Lay and Skilling scheduled for 2006
On February 25, 2005, it is announced that the trial of Kenneth Lay and Jeffrey Skilling, involving charges of fraud and conspiracy related to the Enron scandal, is set to begin on January 17, 2006.
2005-12-28
Richard Causey pleads guilty to securities fraud in Enron case
On December 28, 2005, Richard Causey, the former Enron chief accountant, pleaded guilty to securities fraud in the Enron case.
2006-05-25
Conviction of Lay and Skilling in Enron case
On May 25, 2006, both Kenneth Lay and Jeffrey Skilling were convicted in the Enron case. Lay was convicted on all six counts of conspiracy and fraud, while Skilling was convicted on 19 of 28 counts of conspiracy, fraud, insider trading, and false statements.
2006-09-26
Andrew Fastow Sentenced to 6 Years
On September 26, 2006, Enron's CFO Andrew Fastow is sentenced to 6 years in prison for his role in the Enron scandal.
2007-06-19
Ken Rice Sentenced to 27 Months
On June 19, 2007, Ken Rice, the CEO of Enron Broadband, is sentenced to 27 months in prison and forfeits $15 million for his role in the Enron scandal.
2008-09-19
Enron shareholders and investors split $7 billion from financial institutions
On September 19, 2008, Enron shareholders and investors received a portion of $7 billion from financial institutions involved in the fraud that led to the collapse of the energy company. This distribution was part of a larger $40 billion lawsuit against Bank of America, JPMorgan Chase, Citigroup, and other entities.
End of the Timeline
Enron scandal

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