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JUNARDZ OWEN ARDEPOLLA BSBA -FINANCIAL MANAGEMENT 7:00–8:00 PM. FIN EL 5 . ENRON COLLAPSES It is not unusual for businesses to fail after making bad or ill-timed investments. What turned the Enron case into a major financial scandal was the company’s response to its problems. Rather than disclose its true condition to public investors, as the law requires, Enron falsified its accounts. It assigned business losses and near-worthless assets to unconsolidated partnerships and “special purpose entities.” In other words, the firm’s public accounting statements pretended that losses were occurring not to Enron, but to the so-called Raptor entities, which were ostensibly independent firms that had agreed to absorb Enron’s losses, but were in fact accounting contrivances created and entirely controlled by Enron’s management. In addition, Enron appears to have disguised bank loans as energy derivatives trades to conceal the extent of its indebtedness.
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  • Winter '16
  • Enron scandal, Enron Case, Enron’s losses

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