Enron: The Fall Of A Wall Street Gem

A brief Intro to the Enron Scandal – for Students preparing to watch “The Smartest Guys in the Room”

Instructor: Tom MatysDPR105: INFO MGMT SYSTEMS

Enron: The Players

Kenneth Lee "Ken" Lay was an American businessman. He played a leading role in the corruption scandal that led to the downfall of Enron Corporation.

Enron: The Players

• guilty on one count of conspiracy• guilty on one count of insider trading• guilty on five counts of

making false statements to auditors• guilty on twelve counts of securities fraud• not guilty on nine counts of insider trading

Jeffrey Skilling: CEO Enron

Enron: The Players

Andy Fastow: CFO Enron

Andy Fastow was one of the key figures behind the complex web of off-balance-sheet special purpose entities (limited partnerships which Enron controlled) used to conceal their massive losses. Fastow served a six-year prison sentence for charges related to these acts.

Enron: The Players

Enron’s Accounting Firm:

The Powers Committee (appointed by Enron's board to look into the firm's accounting in October 2001) came to the following assessment: "The evidence available to us suggests that Andersen did not fulfill its professional responsibilities in connection with its audits of Enron's financial statements, or its obligation to bring to the attention of Enron's Board (or the Audit and Compliance Committee) concerns about Enron's internal contracts over the related-party transactions”. - Wikipedia

Enron Innovation

Deregulation of power and energy

Mark to Marketing

Buy/Sell power/energy stock

Enron: What They DidClaimed future profits as current profitsShredded evidenceCongress passes SOXInitially hid profits by moving cash into personal accountsCost 20,000 job losses20 million in retirement funds were lost.

Enron: The Bottom Line

$100 billion in revenue from energy giant Enron was found to have sustained itself by means of institutional and systematic accounting fraud

Caught!

All Good Things Must Come to and End

Questions