The Enron Scandal – A Simple Overview

Most of us are familiar with the infamous Enron scandal and here is what I’m guessing most people know about it. The company cooked the books and pull off some shady accounting tricks They were caught and now cease to exist as a result. But this is a very thin understanding of the subject There was so much stuff that went down I can’t even do it justice in a short video like this. If you wanna become an expert on it, theres a movie I can recommend. It’s called “Enron: the Smartest Guys in the Room”. It’s nearly two hours about the scandal and honestly I think that’s even rushing it. The entire “ordeal” is so complicated that there can easily be an entire college course centered around it and that course would be for the advanced students. Wouldn’t it be great If someone created a youtube video that concisely explained it in a way that is both entertaining and easy to understand? Enron formed trough a merger in 1985 between two energy companies. That’s what Enron was by the way, an energy company. When I say that it’s a huge simplification because Enron was envolved in so many things, in complex ways that the average person didn’t even come close to understanding exactly what the company did. It was founded by a man named Ken Lay. You may want to remember that name. Now let’s fast forward around to the year 2000. It was a fantastic company and very attractive for investors. At the time they were thought of as being one of the world leader in business. I would say it’s like how a few companies like Apple or Google today, but that’s not even close to how amazing Enron was. They were making money and growing at a rate that no-one had ever seen before So here, i’ll pretend to be a financial advisor helping you decided which stock you may want to buy Here we go Ive looked over all the numbers and I strongly advise you to invest in Enron. The one with the fastest growing and most respected companies around today I’ll just show you a few numbers to support my advise As a financial advisor, I look at companies revenue, debts and past stock trends Heres enron’s revenue over the past five years just look at that growth its quicker than I’d ever seen I also checked out their debt an its very reasonable Compared to their equity

100 Replies to “The Enron Scandal – A Simple Overview

  1. Oh hey, the guy who's still alive is out of prison by now. Unless he also died since this video came out.

  2. Ive always found it… Interesting that the man who stole billions from thousands of people get a few years at a country club, but the man who steals a purse gets life in prison.

  3. what about the time line of the scam , that coincides with the wtc . a circumstance that overshadowed the impact of enron to the public (and gave an opportunity for fascist laws and wars )

  4. The lawyers destroyed the files. Literally now we have rules made from Enron making lawyers liable if their clients destroy evidence.

  5. Arthur Andersen also "audited" WorldCom, which was similar to Enron but declared an even larger bankruptcy than Enron did. Arthur Andersen is the worst accounting firm ever. It's fitting that their initials are AA because you'd have to be drunk to be involved in not one but 2 major scandals.

  6. The fall of Arthur Anderson is really sad if you know its origins. A very ethical and humble academic accountant set it up. In the early days it was truly magnificent.

  7. I used to do stock options…..till I bet against oil going down, against Natural gas going down,then corn going down in 2001-2002. (Thee transactions and all my money was gone and owed $2500 in under 2 minutes even with the auto sell and insurance option in the opposite direction o limit losses)

  8. I believe Arthur Anderson was the accounting firm of record for the waste management scandal a few years prior…..should have been the hugestest red flag ever, but no

  9. What was interesting was that Enron's accounting was standard for the time.

    What separated Enron from, say, Global Crossing, is that Enron gave campaign donations primarily to one party. David Lee was a heavy GOP and Gary Winnick gave loads of cash to the Democratic Party.

    Global Crossing had the same accounting standards, massive bankruptcy, etc. But because it was smart enough to be politically bipartisan (instead of non-partisan or partisan) the leadership escaped the fates of Ken Lay and Jeffrey Skilling.

  10. I took an accounting class in college around the time this happened. If we made a mistake on our sheets to hand in, we would joke we pulled an Enron. Looking back, it was a jerk thing to joke about when real people lost real money.

  11. The Smartest Guys in the Room is a great doco. Plus it ends with God's Away on Business by Tom Waites, so that's a bonus 😉

  12. This was the result of the whole anything goes Clinton-Bush era. I believe the movie “Wall Street” and the whole “greed works” ideal set up this whole freewheeling thing. Then we saw the bubble (which was understandable) the bad housing

  13. Just wait …. there are Bad People who learned from this .
    Learned that hey they can do this too. In different ways smaller amounts .
    They'll fail too but the guilty will have taken their share by then.
    Wait for that other foot to drop !

  14. Enron overshadowed the WorldCom collapse. Similar. Would love to see a overview of them,,,, of course, it would include the fall of MCI.

  15. When this went down I worked for a Tyco subsidiary, and I was contracted out to Enron to work on the construction of a new cogeneration plant. In that perfect storm of corporate shenanigans I lost $52k of income. Good times.

  16. there's a podcast called Household Name and they did an episode on what became of all of the Enron emails. long story short they became the basis of AI

  17. I still don't understand how taking money from your Company is a crime.

    It's your fucking company.

  18. Questions: Where did the Enron tapes come from? Who recorded them, and why?
    When did Enron start manipulating West Coast US/Canadain energy markets?

    Which states did Enron control partial, or complete transmission, and partial generation capabilities?

    How much energy did Enron own/control at their peak?
    What other energy companies were involved in the rolling blackouts? Reliant Energy? Duke? Who else?

  19. ENRON was run by scam artists who were in TEXAS and closely tied to the Bush family. That's all you need to know.

  20. If Enron had kept everything legit and honest, and simply waited 10 yrs, they would now be the Google of the American energy business. Instead, they are now one of the biggest stories on CNBC's American Greed show!

  21. What made me sick was the example of a man who worked for a utility in (Washington state)? His company was bought by Enron and the stock he had in his company was exchanged for worthless Enron stock. So his stake of $200k evaporated through no fault of his own.

  22. THE SMARTEST MEN IN THE ROOM IS PART OF THE CONSPIRACY, IT FOCUSES JUST ON THE 4 men inside the company and does not dive into enrons connection to much more piwerful and protected peoples

  23. Imagine being involved in a scandal so bad that you drop dead from a heart attack in the time between when you heard the verdict and your sentence is set to be carried out.

    …Tbh though, it was the best time for him to die; lesson learned now peace out world! 💀

  24. Are you saying another accounting firm would have not approved of Enron's numbers? Also, I heard one short-sheller was looking at cash flow and found it didn't really match up with revenue.

  25. When he said "let's fast forward 1 year" and I saw that stock go down 💀 I yelled FUCK 😭😭😭

  26. Forgot to mention the fact that all of the SEC's files on their investigation into Enron went down with the "collapse" of WTC building 7. Convenient

  27. This is the reason why America will be communist soon. We hope America becomes communist too because we the citizens are tired of cases like this greedy enron outrage!

  28. My mom worked for Enron for 30 years. At its peak it was a great place to work and treated their employees awesome. The projected earnings was actually first approved by the government and was legit because they actually showed the profits they were projecting. Once skilling and fastow took over they inflated the numbers to unobtainable amounts and made it spiral out of control. That's when lay came back to try to right the ship before it was found out and the company collapsed but a whistle blower took the info public and the rest is history.

  29. As a financial adviser giving your client advice to buy Enron, you would have been totally incompetent and inept. The writing was on the wall with Enron long before it collapsed, and most of it could have been figured out by using the financial statements as a diving board to ask the tough and very pertinent questions. You would have been a hero to advise your clients to buy covered shorts.

  30. At least Enron "tried" to cover their losses and had some "actual" business. Tech companies these days could not make a penny and lose billions for years while their stocks prices continue to go up and up. In my opinion these tech unicorns are a bubble waiting to happen.

  31. Company Man: "Wouldn't it be great if someone created a YouTube video that concisely explained it in a way that's both entertaining and easy to understand?"
    Me: *AHEM* —>

  32. shady business deals, and corrupt free trade deals that forced Alcan to pay 110 million to Powerex in 2001, while also forcing every British Colombian pay the tab, for Californians unpaid hydro…. this video give a over simplified quick view of the real corporate criminality of Enron….

  33. Sounds like even if they weren't cooking the books, Enron still woulda tanked due to that horrible Blockbuster deal. 20 years! They must of figured it would be guaranteed money like when a major sports league signs those TV deals worth 20 years. The NBA did that a few years ago and their revenues exploded. The value of a franchise nearly tripled in 5-6 years while player salaries did the same. Somebody needs to do a story on that…

  34. I'm from Houston, I remember when this went down it was THE biggest news at the time. Several of my folks friends literally lost everything they worked for in the form of Enron retirements and 401ks. Was this before or after Tropical Storm Allison flooded Houston?

  35. The movie you mentioned wasn't a good depiction of the scandal. It was mostly more of a comedy…This was far from a comedy.

  36. The worst part about this was ENRON was not just a USA company, they were screwing everyone on other countries as well. They were taking over the Philippines energy system, making all kinds of promises that it would get better. The electric system is well known to have daily blackouts, ENRON was going to fix all this. ENRON collapsed in the middle of all this.
    I am pretty sure we have some other companies skulking around but have not been detected yet. Some of these CEOs get unbelievable wages, usually many times more than you or I will ever see in a life time. Bet they aren't paying the taxes that we are.
    ENRON was a sad story. It would have been great if all they were doing was real.
    But you have to ask, HOW did ENRON execs think they were going to get away with all this???? They had to know it would come to someones attention at some point. You can't hide it forever!!

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