Enron Was America's Most Innovative Company. Its Profits Were Invented.

The story

In August 2000, Enron's stock hit $90. Fifteen months later it was worth 61 cents. Fortune had called it the most innovative large company in America. What it was really inventing was its profits.

This is the story of how a gas pipeline company became a Wall Street star: mark to market accounting, the Blockbuster streaming deal, the hidden side companies, the warning letter, and the biggest bankruptcy in American history at the time.

Three lessons

1. 1

   Profit you haven't earned yet isn't profit. Cash is what's real.

2. 2

   If nobody can explain how you make money, that is a warning, not a compliment.

3. 3

   Listen to the person who raises the alarm. Enron had one, and she was right.

Chapters

1. 0:00Intro
2. 0:28The pipeline company
3. 0:49The trading machine
4. 1:15Profits from the future
5. 1:51Hiding the losses
6. 2:22The peak
7. 2:46The unraveling
8. 3:35The fallout
9. 4:08Three lessons

Sources

Every fact in this file is checked against published sources before release. See our standards.

• Famous Trials (UMKC), Enron chronology (1985 merger, 1992 mark to market approval, $90 stock high, Skilling resignation, Watkins letter, Dynegy, $0.61, bankruptcy, Andersen, convictions)
• International Banker, The Enron scandal (2001) ($68B peak value, Blockbuster deal profit, Fastow $45M, Andersen $52M fees, $63.4B assets, 4,000 jobs, sentences)
• ABA Journal, Dec. 2, 2001: Enron files for bankruptcy
• Congressional Research Service, Enron bankruptcy and employer stock in retirement plans (62% of 401(k) assets in Enron stock)
• IDM, Enron in broadband scam (Blockbuster deal ended March 2001)