December 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.

history.com/tdih.do

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


American Revolution
1777 : Philadelphia nurse overhears British plans to
attack Washington

history.com/tdih.do?action=tdihArticleCategory&id=31