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N0KFQ > TODAY 02.12.14 17:00l 64 Lines 3058 Bytes #999 (0) @ WW
BID : 41375_N0KFQ
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Subj: Today in History - Dec 2
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Sent: 141202/1600Z 41375@N0KFQ.#SWMO.MO.USA.NA BPQK1.4.62
Dec 2, 2001:
Enron files for bankruptcy
On this day in 2001, the Enron Corporation files for Chapter 11
bankruptcy protection in a New York court, sparking one of the
largest corporate scandals in U.S. history.
An energy-trading company based in Houston, Texas, Enron was
formed in 1985 as the merger of two gas companies, Houston
Natural Gas and Internorth. Under chairman and CEO Kenneth Lay,
Enron rose as high as number seven on Fortune magazine's list of
the top 500 U.S. companies. In 2000, the company employed 21,000
people and posted revenue of $111 billion. Over the next year,
however, Enron's stock price began a dramatic slide, dropping
from $90.75 in August 2000 to $0.26 by closing on November 30,
2001.
As prices fell, Lay sold large amounts of his Enron stock, while
simultaneously encouraging Enron employees to buy more shares and
assuring them that the company was on the rebound. Employees saw
their retirement savings accounts wiped out as Enron's stock
price continued to plummet. After another energy company, Dynegy,
canceled a planned $8.4 billion buy-out in late November, Enron
filed for bankruptcy. By the end of the year, Enron's collapse
had cost investors billions of dollars, wiped out some 5,600 jobs
and liquidated almost $2.1 billion in pension plans.
Over the next several years, the name "Enron" became synonymous
with large-scale corporate fraud and corruption, as an
investigation by the Securities and Exchange Commission and the
U.S. Justice Department revealed that Enron had inflated its
earnings by hiding debts and losses in subsidiary partnerships.
The government subsequently accused Lay and Jeffrey K. Skilling,
who served as Enron's CEO from February to August 2001, of
conspiring to cover up their company's financial weaknesses from
investors. The investigation also brought down accounting giant
Arthur Anderson, whose auditors were found guilty of deliberately
destroying documents incriminating to Enron.
In July 2004, a Houston court indicted Skilling on 35 counts
including fraud, conspiracy and insider trading. Lay was charged
with 11 similar crimes. The trial began on January 30, 2006, in
Houston. A number of former Enron employees appeared on the
stand, including Andrew Fastow, Enron's ex-CFO, who early on
pleaded guilty to two counts of conspiracy and agreed to testify
against his former bosses. Over the course of the trial, the
defiant Skilling--who unloaded almost $60 million worth of Enron
stock shortly after his resignation but refused to admit he knew
of the company's impending collapse--emerged as the figure many
identified most personally with the scandal. In May 2006,
Skilling was convicted of 19 of 35 counts, while Lay was found
guilty on 10 counts of fraud and conspiracy. When Lay died from
heart disease just two months later, a Houston judge vacated the
counts against him. That October, the 52-year-old Skilling was
sentenced to more than 24 years in prison.
73, K.O. n0kfq
N0KFQ @ N0KFQ.#SWMO.MO.USA.NA
E-mail: kohiggs@gmail.com
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