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.
history.com/tdih.do
General Interest
2001 : Enron files for bankruptcy
history.com/tdih.do?action=tdihVideoCategory&id=52282
1804 : Napoleon crowned emperor
history.com/tdih.do?action=tdihArticleCategory&id=5567
1823 : Monroe Doctrine declared
history.com/tdih.do?action=tdihArticleCategory&id=5568
1859 : John Brown hanged
history.com/tdih.do?action=tdihArticleCategory&id=5569
1954 : McCarthy condemned by Senate
history.com/tdih.do?action=tdihArticleCategory&id=7099
##########################################
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.
history.com/tdih.do
General Interest
2001 : Enron files for bankruptcy
history.com/tdih.do?action=tdihVideoCategory&id=52282
1804 : Napoleon crowned emperor
history.com/tdih.do?action=tdihArticleCategory&id=5567
1823 : Monroe Doctrine declared
history.com/tdih.do?action=tdihArticleCategory&id=5568
1859 : John Brown hanged
history.com/tdih.do?action=tdihArticleCategory&id=5569
1954 : McCarthy condemned by Senate
history.com/tdih.do?action=tdihArticleCategory&id=7099
##########################################
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