Enron Case Review: The Smartest Guys In The Room

Prior to watching the movie "The Smartest Guys in the Room" and learning in class in depth about the Enron scandal and the counterparts that had hands in it I didn 't know much about it nor the effects it had on the way companies are regulated today. Prior knowledge of the Enron case was learned in my auditing class but only briefly to provide an introduction to the Sarbanes-Oxley Act passed in 2002 by Congress to protect investors from the possibility of fraudulent accounting activities by corporations. The Sarbanes-Oxley Act (SOX) mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud. Overall it was made to address systematic flaws in the way of corporations had been reporting their numbers.

Starting in late 2001 Enron would purchase electricity commodities and then periodically shut down power plants in California. The widespread power outages caused the investments to increase in value, which Enron then sold for a profit. Throughout the late nineties, Enron used these methods to record astounding revenue and its stock price continued to rise. By late 2000, top executives at Enron, including Lay, Fastow, and Skilling, saw the company 's losses and failures and sold their respective stocks, cashing in millions simultaneously. Lay would constantly assure investors that all was well and that participating in Enron was a worthy idea, yet Enron stock began to drop

The people he formed his team with, Skilling, Fastow, and more, we 're only concerned with making money and nourished to cut-throat survival-of-the-fittest culture that encourages employees to break the law. Most interesting is the involvement of other US corporations and banks in all the drama. Enron had connections with hundreds of major corporations that made Enron 's fraud possible. Arthur Andersen, a highly-regarded auditing corporation, was tasked with reviewing and corroborated all of Enron 's books and records. Instead, Arthur Anderson concealed Enron 's mistakes and was later charged with obstruction of justice for shredding and burning Enron 's most criminalizing documents and soon dissolved. Wholly conveyed, the question who should we blame does not have a simple answer. Enron 's top executives were certainly corrupt and contributed to the company 's fall, yet so many other people entities had a role in causing it. Lay, Skilling, and Fastow were encouraged by the market 's competitive profit focused and immoral environment, and all perpetrated these ideas within Enron. The individuals, the company 's culture, and the systemic problems of the US market all played a part in this monumental