Do you know about ENRON?

Question

Do you know what happened with this corporation, and why? Why did a man commited suicide?

Answer 1

Get a copy of this book. Sherron Watkins was the executive vice-president that blew the whistle on ENRON.

Mimi Swartz with Sherron Watkins: Power Failure. The Inside Story of The Collapse of Enron, ISBN 0-385-50888-3 (March 2003).

The basic story is they falsified information that was given to their stockholders and FTC (Federal Trade Commission). The short version is they cooked the books.

One of the company policies was to give employees stock in the company in lieu of traditional retirement packages (i. e. - they had no 401K plan or other profit sharing plans). When the company went under, several thousand employees lost their entire life savings. Recent law suit settlements gained them something less than half of what they lost.

J. Clifford Baxter was a vice-chairman, and he is the man that committed suicide whe the company began to collapse.

Answer 2

Here's the general idea for this company and many others:

A company sells stock because they need money. They need to build a doohickey or research a turbo feature for their doodad or they just need to buy sheet metal for their whatevers. People buy the stock because it could go up, because of a dividend that could pay them for life, because it gives them a vote - whatever.

Stock OPTIONS are given to certain employees. It allows the employees to purchase the company's stock at a price ABOVE the current price - why? - so they will make the company a success and the stock price will rise to that purchase price and BEYOND. The more it rises, the more their options are worth, and the more money they make. Many executives are PAID with stock options.

So. Something happens, or the execs are incompetent, or whatever - instead of doing work, or if their hardwork isn't enough, they change the numbers in their accounting so it LOOKS like the company made a lot more money than they really did. So the stock goes up.

But THEEEEEN someone catches them. The public is pissed, the trust is gone, people sue - and the stock drops. Now all their money is gone, they go to jail for a long time because people's retirement is shot.

Answer 3

Just saw the movie "The Smartest Guys in the Room". It is an Enron expose'. Too much greed. They really thought they were smarter than the accountants, lawyers, bankers, brokers, investors, California politicians, etc., and arguably they were..... That's not even to mention the Bush connection ....