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Kenneth Lee Lay (April 15, 1942 – July 5, 2006) was an American businessman who was the founder, chief executive officer and chairman of Enron. He was heavily involved in Enron's accounting scandal that unraveled in 2001 into the largest bankruptcy ever to that date.
- Trial of Kenneth Lay and Jeffrey Skilling
The trial of Kenneth Lay, former chairman and CEO of Enron,...
- Timeline of The Enron Scandal
Enron scandal - Wikipedia ... Enron scandal
- Richard Kinder
Richard Kinder - Wikipedia ... Richard Kinder
- Lou Pai
Lou Pai - Wikipedia ... Lou Pai
- Andrew Fastow
Andrew Fastow - Wikipedia ... Andrew Fastow
- Trial of Kenneth Lay and Jeffrey Skilling
- Overview
- Founding of Enron and its rise
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The Enron scandal was a series of events involving dubious accounting practices that resulted in the 2001 bankruptcy of the energy, commodities, and services company Enron Corporation and the subsequent dissolution of the accounting firm Arthur Andersen. The collapse of Enron, which held more than $60 billion in assets, involved one of the biggest bankruptcy filings in the history of the United States.
What effects did the Enron scandal have?
The Enron scandal resulted in a wave of new regulations and legislation designed to increase the accuracy of financial reporting for publicly traded companies. The Sarbanes-Oxley Act (2002) imposed harsh penalties for destroying, altering, or fabricating financial records. The act also prohibited auditing firms from doing any concurrent consulting business for the same clients.
Enron scandal, series of events that resulted in the bankruptcy of the U.S. energy, commodities, and services company Enron Corporation in 2001 and the dissolution of Arthur Andersen LLP, which had been one of the largest auditing and accounting companies in the world. The collapse of Enron, which held more than $60 billion in assets, involved one of the biggest bankruptcy filings in the history of the United States, and it generated much debate as well as legislation designed to improve accounting standards and practices, with long-lasting repercussions in the financial world.
Enron was founded in 1985 by Kenneth Lay in the merger of two natural-gas-transmission companies, Houston Natural Gas Corporation and InterNorth, Inc.; the merged company, HNG InterNorth, was renamed Enron in 1986. After the U.S. Congress adopted a series of laws to deregulate the sale of natural gas in the early 1990s, the company lost its exclusive right to operate its pipelines. With the help of Jeffrey Skilling, who was initially a consultant and later became the company’s chief operating officer, Enron transformed itself into a trader of energy derivative contracts, acting as an intermediary between natural-gas producers and their customers. The trades allowed the producers to mitigate the risk of energy-price fluctuations by fixing the selling price of their products through a contract negotiated by Enron for a fee. Under Skilling’s leadership, Enron soon dominated the market for natural-gas contracts, and the company started to generate huge profits on its trades.
Skilling also gradually changed the culture of the company to emphasize aggressive trading. He hired top candidates from MBA programs around the country and created an intensely competitive environment within the company, in which the focus was increasingly on closing as many cash-generating trades as possible in the shortest amount of time. One of his brightest recruits was Andrew Fastow, who quickly rose through the ranks to become Enron’s chief financial officer. Fastow oversaw the financing of the company through investments in increasingly complex instruments, while Skilling oversaw the building of its vast trading operation.
The bull market of the 1990s helped to fuel Enron’s ambitions and contributed to its rapid growth. There were deals to be made everywhere, and the company was ready to create a market for anything that anyone was willing to trade. It thus traded derivative contracts for a wide variety of commodities—including electricity, coal, paper, and steel—and even for the weather. An online trading division, Enron Online, was launched during the dot-com boom, and by 2001 it was executing online trades worth about $2.5 billion a day. Enron also invested in building a broadband telecommunications network to facilitate high-speed trading.
Britannica Quiz
Learn about the Enron scandal, which led to the bankruptcy of the U.S. energy company in 2001 and the collapse of its auditor, Arthur Andersen. Find out how Enron's founders, executives, and accountants engaged in fraudulent practices and what were the consequences for the financial world.
Jul 5, 2006 · Kenneth Lay, the founder of Enron Corp., died of coronary artery disease in 2006 while vacationing in Colorado. He was convicted of fraud and conspiracy charges related to the collapse of the energy giant, but insisted he was innocent.
Jul 5, 2006 · Ken Lay, the founder of Enron Corp. who faced life in prison for his role in the Texas energy giant's collapse, is dead at 64 of a heart attack.
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The trial of Kenneth Lay, former chairman and CEO of Enron, and Jeffrey Skilling, former CEO and COO, was presided over by federal district court Judge Sim Lake in the Southern District of Texas in 2006 in response to the Enron scandal.
Jul 6, 2006 · Kenneth L. Lay, the son of a Baptist preacher in rural Missouri who rose to the pinnacle of corporate America as head of Enron before becoming a symbol of corporate excess, died yesterday in...
May 25, 2006 · Lay, 64, was convicted on all six counts against him, including conspiracy to commit securities and wire fraud. He faces a maximum of 45 years in prison.
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