The Enron scandal remains one of the biggest corporate frauds in global history, leading to the largest bankruptcy in the United States at the time and triggering sweeping regulatory changes worldwide. Enron Corporation, once ranked the seventh-largest U.S. company with a reported revenue of $100 billion in 2000, collapsed in December 2001 after it was revealed that executives manipulated financial statements, hid massive debts, and engaged in fraudulent accounting practices.

It led to major reforms such as the Sarbanes-Oxley Act (SOX) of 2002 in the U.S. and influenced similar regulatory changes in Europe, India, and other global financial markets

Facts of the Case

1. About Enron Corporation

• Founded in 1985 after a merger between Houston Natural Gas and InterNorth
• Quickly expanded into energy trading, broadband services, and derivatives markets
• Claimed revenues of over $100 billion in 2000, positioning itself as a Wall Street favorite
• Touted as an innovative energy-trading giant until its fraud was exposed in 2001

2. Fraudulent Accounting Practices

• Used mark-to-market accounting to book projected future profits as current earnings, creating an illusion of financial strength
• Shifted massive debts off the balance sheet using Special Purpose Vehicles (SPVs) to conceal liabilities
• Hid financial losses through complex accounting structures, misleading investors and regulators

Source: SEC Investigative Report, 2002

3. The Collapse

• In October 2001, Enron admitted it had overstated earnings by $586 million since 1997
• Stock plummeted from $90 per share in mid-2000 to below $1 in November 2001
• Filed for bankruptcy on December 2, 2001, marking the largest U.S. corporate failure at the time
• Tens of thousands of employees and investors lost billions

Source: U.S. Department of Justice Indictment, 2003 (https://www.justice.gov).