Enron wasn't actually doing very well financially, but the executives illegally changed their financial records

to make it look like they were doing great. So everyone thought it was good, and people kept on buying shares, and share prices kept on rising. All the while, the executives of Enron were slowly selling off their shares at a high price, because only they knew that the reality was that the shares were worthless. The crime is called "Insider Trading". It's also what Martha Stewartwas arrested for. They got caught, and went to jail. The share prices plummeted, and all of the shareholders lost their investment money. For many innocent Enron employees, their pensions were guaranteed in Enron stock, so when they share prices died, so did their pension funds. Thousands of innocent people lost huge ..amounts of money.\ Enron evolved from a legitimate pipeline gas trader into what is known in business as a "black box" -- an enterprise that reports but cannot verify its profits. Jeff Skilling, the company's leader, instituted "mark to market" accounting, where projected profits from any of the company's deals were registered on the books as real, even if over time they turned out to be losses. So Enron appeared to be successful despite losing money, a fact carefully hidden from investors whose purchase of Enron stock provided the capital to keep the charade going. Other corporate entities were established by Enron to help disguise its deficits from Wall Street. With the collusion of a bribed accounting firm and number of prominent banks, the deceit lasted until the collapse of the 1990s tech boom. As bad as that fraud was, the worst part of the scandal occurred when Enron used its control of a West Coast electric company to extort billions of dollars from California by creating artificial blackouts. If the state did not pay Enron's outrageous rates, the power was shut off. Consequently, people were stuck in elevators, and cars crashed because traffic signals went dead. For a company to bring a state to its knees like that is one of the most despicable acts perpetrated in American business history. Disgraced CEO Kenneth Lay escaped punishment by dying before sentencing, but Jeff Skilling will rot in prison, a curious fate for a graduate of the prestigious Harvard Business School.

The Enron scandal was a financial scandal that was revealed in late 2001. After a series of revelations involving irregular accounting procedures bordering on fraud, perpetrated throughout the 1990s, involving Enron and its accounting firm Arthur Andersen, it stood at the verge of undergoing the largest bankruptcy in history by mid-November 2001. A white knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable. Enron filed for bankruptcy on December 2, 2001. As the scandal was revealed, Enron shares dropped from over US$90.00 to just pennies. As Enron had been considered a blue chip stock, this was an unprecedented and disastrous event in the financial world. Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled). The result was that many of Enron's debts and the losses that it suffered were not reported in its financial statements. In addition, the scandal caused the dissolution of Arthur Andersen, which at the time was one of the world's top five accounting firms.

..Enron committed accounting fraud by hiding huge amounts of debt from their balance sheet, creating numerous off shore entities to hold the debt and also to avoid taxes, which increased profit. They also inflated earning by using "market to market" accounting which anticipated future profits from any deal were tabulated as if real today. Thus, it could record gains from what over time turned out to be losses. As the company actually kept losing money, the firm had to perform more contorted financial deception to make it appear profitable so that is stock value would remain high on the market. Also, it kept telling its employees that it expected the stock to keep rising, while the executives began unloading their share as the fraud slowly came to light. How this is impacted the stockholders is the same way it impacted its employees. The stockholders invested in the company based upon its distorted results the same way employees chose company stock as an increasing part of their retirement package. They gave their money thinking that what they were buying would be worth more in the future, because based on its financial reports Enron was a highly profitable company. Once the truth came out that Enron was riddled with debt, and losing money, the stock plummeted causing both employees and stockholders to have worthless investments. It would be like you buying a $200 signed baseball card because you relied on someone telling you that the autograph on it was genuine, including giving you a certificate of authenticity, then learning it was fake and it wasnt worth $5. You just lost over 97% of your investment. Now imagine that for people you invested thousands of dollars on something that turned out to be not worth 1% of what they paid for it. The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution ofArthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was [1] attributed as the biggest audit failure. Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that, by the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions of dollars in debt from failed deals and projects. Chief Financial Officer Andrew Fastowand other executives not only misled Enron's board of directors and audit committee on high-risk accounting practices, but also pressured Andersen to ignore the issues. Enron shareholders filed a $40 billion law suit after the company's stock price, which achieved a high [2] of US$90 per share in mid-2000, plummeted to less than $1 by the end of November 2001. The U.S. Securities and Exchange Commission (SEC) began an investigation, and rival Houston competitor Dynegy offered to purchase the company at a very low price. The deal failed, and on December 2, 2001, Enron filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Enron's $63.4 billion in assets made it the largest corporate bankruptcy in U.S. history untilWorldCom's [3] bankruptcy the next year. Many executives at Enron were indicted for a variety of charges and were later sentenced to prison. Enron's auditor, Arthur Andersen, was found guilty in a United States District Court, but by the time the ruling was overturned at the U.S. Supreme Court, the company had lost the majority of its customers and had closed. Employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices. As a consequence of the scandal, new regulations and legislation were [4] enacted to expand the accuracy of financial reporting for public companies. One piece of legislation, the Sarbanes-Oxley Act, increased penalties for destroying, altering, or fabricating records in federal

investigations or for attempting to defraud shareholders. The act also increased the accountability of [4] auditing firms to remain unbiased and independent of their clients. Being literate you know some of the logic of words [definitions and word use in reasonable speech] and of affirmative and negative propositions, covered by Aristotle's first 2 treatises. Then when you state 2 sentences and a conclusion you are actually DOING both "formal logic" ["syllogism"; reasoning] and "major logic" or material logic (because your words refer to actual things). Your other answerer who used letters to explain formal logic is partly correct. Aristotle was the 1st person to use letters to represent single words/terms in argument forms [formal logic] in his 3rd logic treatise where he discussed both categorical and modal reasoning. Your other answerer uses both forms (categorical and modal) in explaining formal logic, but confuses mathematical logic [the "=" sign] with both other forms. His 1st example is a sort of mathematical-modal logic hybrid because he uses the IF...THEN... mode of reasoning, also called the scientific or hypothetical mode, and the "=" sign, peculiar to mathematics. For example A = B may mean "This A(nimal) is B(at)" [Formally stated as A =B] which may be reversed and equivalently stated as B = A [This Bat is an Animal.], as in arithmetic. But the "example" breaks down with propositions such as "Every animal is a bat" (A = B), which is false, and "Every bat is an animal." (B = A), which is true. In short MATHEMATICAL LOGIC is a limited subbranch of FORMAL LOGIC --- no matter what "protests" modern formal logicians may submit. In Aristotle's phrasing "...numbers have peculiar properties in themselves or in relation to one another". [Metaphysics BK IV., Ch. 2. 1004b line 12] of which EQUALITY is peculiar to quantity [the 2nd thought Category]. But logic is not always about equality. Bats may be ambiguously called "equal" to animals. But not all animals are "equal" to bats. On careful weighing no 2 human beings may be "equal", but in substance or activity (etc.) every human being is identical to every other human being. Identity is not equality. To the point:- Formal logic justifies the logical relations of the 3 terms (words) of 2 simple sentences to each other and to a conclusion, without regarding actual words/meanings. The "form", without the content [the actual words], is what a logician analyses for VALIDITY, in formal logic. By using letters to represent or symbolize terms/words, the ambiguity (more than one meaning) of words in normal speech can be avoided while simply examining the "FORM" or structure of arguments. In contrast to Aristotle's FORMAL LOGIC, which used letters to replace terms/words, modern SYMBOLIC LOGICIANS employ letters in place of entire sentences. So they also call their discipline SENTENTIAL LOGIC --- which is a very different procedure from the way that Aristotle used letters to replace simple words in his system of FORMAL LOGIC. Like your other answerer's arithmetical phrasing, symbolic logicians tend to consider various mathematical like "operators" [negation; conjunction; disjunction; hypothesis; etc.] between entire sentences to be paramount in logic, in contrast to Aristotle who placed his emphasis on both the subject-terms/words and the predicate-terms/words of sentences. Thus Aristotle's system of FORMAL LOGIC is based upon 4 types of categorical sentences, containing 2 terms, used in 2 sentences [4 X 4 = 16 possible combinations of 4 types of sentences in a 2 sentence combination] with 4 possible arrangements of 3 terms (A, B and C) in 2 sentences, for a total of 64 [4 X 16] possible "formal" arrangments of terms.

[5]

But only 19 of the 64 possible FORMS [formal arrangments of terms] are VALID because of the actual rules of reasoning, which are all based upon the IDENTITY or NON-IDENTITY [rather than "equality"] of individual terms of syllogisms. The modal logics actually "follow" from the basic rules of FORMAL logic.