The paper highlights the scandal of Enron and three prominent issues of Enron which led to the collapse of Enron. Enron was energy, commodities, and services company based in Houston, America. After reaching an incredible height of success, Enron Corporation collapsed because of bankruptcy. The policies implemented by Enron backfired and proved to be fatal for the company,as the company crumbled down. The deregulation of Enron was one of the reasons for its doomed fate since Enron was involved in maintaining agency’s earnings reports for investors. Enron did the reporting in a vague manner, hence hiding the complete facts from the investors. Misrepresentation of the data by the Enron Corporation to gain profit and revenue from the investors, Enron executives were involved in obtaining embezzled funds from the investors while providing misinterpreted data which attracted more investors to invest in the company. For Enron to avoid the financial bubble rising within the company it hid the true financial condition. After reaching high levels of success, in 2000 Enron misinformed the market about the critical condition of the natural gas within California. From that time Enron had arespectful position in the market and everyone believed it to be true. Enron continued to enjoy the funds coming in from the different investors avoiding the bankruptcy which the company was facing already.
The deregulation of Enron, misrepresentation, and fake energy crisis paved the way for Enron to lose all of its credibility in the market. The executives of Enron were involved in the criminal activities which eventually led Enron’s bankruptcy. Enron collapsed on 2 December 2001 and the investors faced a loss of $ 70 billion. Hence, a very inadequate amount of money was returned. Due to the acts of embezzlement rendered by the executives, Enron went bankrupt. It is easy to conclude that the investments pocketed by the executives from investors were stolen from the company which caused the bankruptcy of the Company.
Reference
Laws. (2015). Easy Guide to understanding Enron scandal summary. Retrieved from: http://finance.laws.com/enron-scandal-summary
