Sunday, December 2, 2018

December 2nd...This Day in History (Enron files for bankruptcy + others)

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Enron files for bankruptcy 2001

On this day in 2001, the Enron Corporation files for Chapter 11 bankruptcy protection in a New York court, sparking one of the largest corporate scandals in U.S. history.

An energy-trading company based in Houston, Texas, Enron was formed in 1985 as the merger of two gas companies, Houston Natural Gas and Internorth. Under chairman and CEO Kenneth Lay, Enron rose as high as number seven on Fortune magazine’s list of the top 500 U.S. companies. In 2000, the company employed 21,000 people and posted revenue of $111 billion. Over the next year, however, Enron’s stock price began a dramatic slide, dropping from $90.75 in August 2000 to $0.26 by closing on November 30, 2001.

As prices fell, Lay sold large amounts of his Enron stock, while simultaneously encouraging Enron employees to buy more shares and assuring them that the company was on the rebound. Employees saw their retirement savings accounts wiped out as Enron’s stock price continued to plummet. After another energy company, Dynegy, canceled a planned $8.4 billion buy-out in late November, Enron filed for bankruptcy. By the end of the year, Enron’s collapse had cost investors billions of dollars, wiped out some 5,600 jobs and liquidated almost $2.1 billion in pension plans.

Over the next several years, the name “Enron” became synonymous with large-scale corporate fraud and corruption, as an investigation by the Securities and Exchange Commission and the U.S. Justice Department revealed that Enron had inflated its earnings by hiding debts and losses in subsidiary partnerships. The government subsequently accused Lay and Jeffrey K. Skilling, who served as Enron’s CEO from February to August 2001, of conspiring to cover up their company’s financial weaknesses from investors. The investigation also brought down accounting giant Arthur Andersen, whose auditors were found guilty of deliberately destroying documents incriminating to Enron.

In July 2004, a Houston court indicted Skilling on 35 counts including fraud, conspiracy and insider trading. Lay was charged with 11 similar crimes. The trial began on January 30, 2006, in Houston. A number of former Enron employees appeared on the stand, including Andrew Fastow, Enron’s ex-CFO, who early on pleaded guilty to two counts of conspiracy and agreed to testify against his former bosses. Over the course of the trial, the defiant Skilling–who unloaded almost $60 million worth of Enron stock shortly after his resignation but refused to admit he knew of the company’s impending collapse–emerged as the figure many identified most personally with the scandal. In May 2006, Skilling was convicted of 19 of 35 counts, while Lay was found guilty on 10 counts of fraud and conspiracy. When Lay died from heart disease just two months later, a Houston judge vacated the counts against him. That October, the 52-year-old Skilling was sentenced to more than 24 years in prison.

(More Events on This Day in History)

MUSIC
1972
The Temptations earn their final #1 hit with “Papa Was A Rolling Stone”
On December 2, 1972, the Temptations earn the last of their four chart-topping hits when “Papa Was A Rollin’ Stone” reaches #1 on the Billboard Hot 100. Over the course of their storied career, the Temptations placed 38 hit records in the pop top 40—not just more than any other ...

GENERAL INTEREST
1804
Napoleon crowned emperor
In Notre Dame Cathedral in Paris, Napoleon Bonaparte is crowned Napoleon I, the first Frenchman to hold the title of emperor in a thousand years. Pope Pius VII handed Napoleon the crown that the 35-year-old conqueror of Europe placed on his own head. The Corsican-born Napoleon, ...

GENERAL INTEREST
1859
John Brown hanged
In Charles Town, Virginia, militant abolitionist John Brown is executed on charges of treason, murder, and insurrection. Brown, born in Connecticut in 1800, first became militant during the mid-1850s, when as a leader of the Free State forces in Kansas he fought pro-slavery ...

GENERAL INTEREST
1823
Monroe Doctrine declared
During his annual address to Congress, President James Monroe proclaims a new U.S. foreign policy initiative that becomes known as the “Monroe Doctrine.” Primarily the work of Secretary of State John Quincy Adams, the Monroe Doctrine forbade European interference in the American ...

GENERAL INTEREST
1954
McCarthy condemned by Senate
The U.S. Senate votes 65 to 22 to condemn Senator Joseph R. McCarthy for conduct unbecoming of a senator. The condemnation, which was equivalent to a censure, related to McCarthy’s controversial investigation of suspected communists in the U.S. government, military, and civilian ...

WORLD WAR II
1942
Fermi produces the first nuclear chain reaction
On this day, Enrico Fermi, the Italian-born Nobel Prize-winning physicist, directs and controls the first nuclear chain reaction in his laboratory beneath the bleachers of Stagg Field at the University of Chicago, ushering in the nuclear age. Upon succesful completion of the ...

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