Financial Disasters: The Enron Scandal
The Enron scandal was a financial scandal that was revealed in late 2001. After a series of discoveries involving irregular accounting procedures which could be turned in as fraud, went on throughout the 1990s, involving Enron and its accounting firm Arthur Andersen. Enron stood at the verge of falling into the largest bankruptcy in history by mid-November 2001. An attempt by a smaller energy company, Dynegy, was not feasible. Enron filed for bankruptcy on December 2, 2001. As the scandal was shown, Enron shares dropped from over $90.00 to just pennies. As Enron had been considered a blue chip stock, this was event came as a surprise to all and was an overall disaster in the financial world. Enron's downfall happened soon after …show more content…
Jeffrey Skilling, while still in his capacity as CEO, went as far as to use an expletive against a participant in a conference call who was insistent that Enron release balance sheet numbers along with earnings.
Regarding the SEC investigation, chairman and CEO Lay said, "We will cooperate fully with the S.E.C. and look forward to the opportunity to put any concern about these transactions to rest."
A few days into November 2001 it became known that the Enron management had been aggressively pursuing new investment or an outright buyout. The efforts were reported to have been largely unsuccessful. Investor Warren Buffett was approached, but declined. Other overtures were made to prominent buyout firms such as Clayton, Dubilier & Rice, the Blackstone Group, and Kohlberg Kravis Roberts, all apparently fruitless efforts.
Sources claimed that Enron was planning to explain its business practices more fully within the coming days, as a confidence-building gesture. Enron's stock was now trading at around $7, as investors worried that the company would not be able to find a buyer.
After it received a wide spectrum of rejections, Enron