• The Enron scandal was a corporate scandal involving the American energy

company Enron Corporation based in Houston, Texas and the accounting,

auditing, and consultancy firm Arthur Andersen, that was revealed in October
2001.
• Enron's stock price is $90 per share in mid-2000, plummeted to $0.10 in October
2001. The drop in Enron’s stock price is estimated to have caused its stockholders
to lose $11 billion.
• On December 2, 2001, with assets of $63.4 billion, it was the largest corporate
bankruptcy in U.S. history until
• By 1992, Enron was the largest merchant of natural gas in North America,
Enron’s net income, with an earnings before interest and taxes of $122 million.
• Enron’s stock rose from the start of the 1990s until year-end 1998 by 311%
percent. The stock increased by 56% in 1999 and a further 87% in 2000,
compared to a 20% increase and a 10% decline for the index during the same
years. By December 31, 2000, Enron’s stock was priced at $83.13 and its market
capitalization exceeded $60 billion.

Financial reporting
• Mark-to-market accounting, was central to Enron’s income recognition
• Transactions that involve setting up of special purpose entities.

Executive compensation
• At December 31, 2000, Enron had 96 million shares.
• January 2001 stock price of $83.13 and the directors’ beneficial ownership
reported in the 2001 proxy, the value of director stock ownership was $659
million for Kenneth Lay and $174 million for Jeffrey Skilling.

Financial audit
In 2000, Arthur Andersen earned $25 million in audit fees and $27 million in
consulting fees.

Timeline of Enron's downfall

• On March 5, 2001, Bethany McLean's. questioned how Enron could maintain
its high stock value, which was trading at 55 times its earnings.
• On August 14, 2001, Skilling had sold at minimum 450,000 shares of Enron at
a value of around $33 million.
• On October 22, 2001, the share price of Enron fell to $20.65, down $5.40 in one
day.
Bankruptcy
• On November 28, 2001.
• On November 30, 2001 Enron was estimated to have about $23 billion in
liabilities.
• Around 15,000 employees held 62% of their savings in Enron stock, purchased
at $83.13 in early 2001; when it went bankrupt in October 2001, Enron’s stock
plummeted to $0.10.

Trials
• Kenneth Lay, the former Chairman of the Board and Chief Executive Officer and
Jeffrey Skilling, former Chief Executive Officer and Chief Operating Officer,
went on trial for their part in the Enron scandal in January 2006. The 53-count,
65-page indictment covers a broad range of financial crimes, including bank
fraud, making false statements to banks and auditors, securities fraud, wire
fraud, money laundering, conspiracy, and insider trading.
• Lay stated that he was misled by those around him. At the time of his death in
July 2006 the U.S. Securities and Exchange Commission (SEC) had been seeking
more than $90 million from Lay in addition to civil fines.
• Mrs. Lay sold roughly 500,000 shares of Enron ten minutes to thirty minutes
before the information that Enron was went public on November 28, 2001.
• On May 25, 2006, Skilling was convicted of 19 of 28 counts of securities fraud
and wire fraud and acquitted on the remaining nine, including charges of insider
trading. He was sentenced to 24 years and 4 months in prison. Lay was
convicted of all six counts of securities and wire fraud for which he had been
tried, and he faced a total sentence of up to 45 years in prison.
• Enron CFO Andrew Fastow. All told, sixteen people pleaded guilty for crimes.

 http://en.wikipedia.org/wiki/Enron_scandal