EP 102: Enron

Hashtag History

This week on Hashtag History, we are discussing the Enron Scandal, a major accounting fraud that took place in late-2001 when Enron Corporation - who, only the year prior, was considered to be one of the most successful companies in the world - announced that it was posting a $638 billion dollar loss in the third quarter…and then followed up that up shortly thereafter by filing for Chapter 11 bankruptcy protection. In only a few months, the company’s stock price - which, at its height, was $90 per share - fell to less than $0.26 per share. Along with the demise of the company also came the demise of nearly $2.1 billion dollars in pension plans for its thousands of employees. In fact, as higher-ups in the company were selling off their stock - aware that things were going to tank soon - they were simultaneously telling lower-level employees to invest in more company stock. The Securities and Exchange Commission investigated what happened at Enron and found that they had been conducting shady accounting practices, such as writing future gains (that had not yet been received) into current income statements and transferring their bad assets into special purpose entities in order to keep them off the books. Essentially, Enron was lying about their profits, defrauding investors, their employees, and Americans as a whole.

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