Enron was an energy trading company formed in 1985, based in Texas and employed around 21,000 people-before it went bankrupt. Fraudulent accounting practices allowed it to become one of the largest companies in the US. Enron invented the trading of communications, power, and weather securities. It dominated the trading and instead of being successful, it became the largest financial scandal in history as a symbol of well-planned corporate fraud.
Enron created the phony California electricity crisis. There was never a shortage of power in California. Phone recordings between Enron traders and California power plant operators reveal the traders asking plant managers to "get a little creative" in shutting down plants for "repairs." About 30 to 50 percent of California's energy plants shut down as suggested by the traders as Enron drove the price of electricity nine times higher.
By November 2001, after a series of scandals associated with their accounting practices, Enron stood at the edge of the largest bankruptcy in history. Enron was thought to be a blue chip stock but there bankruptcy caused a terrible event in the financial world.
The executives at Enron were indicted on different charges and were sent to prison. Employees and stockholders lost billions of dollars, while the lawsuits provided very little money in return. Because of this scandal, new regulations were developed to improve the reliability of the financial reporting and require the accounting firms to be independent of their clients. The regulations should prevent the scandal experienced with