ENRON Movie Review
Enron is said to be one of the largest US company that went to bankruptcy. Under the leadership of Kenneth Lay with his companion Jeff Skilling, they were responsible of the criminal activity inside the company. They stole funds from one’s trusts and fake the company’s accounting to their personal use.
Jeff Skilling introduces the company to use mark to market accounting. Mark to market refers to the measurement of the fair value of assets and liabilities according to its current market price to come up with the company’s financial situation. It provides an accurate information of an asset’s current value for the investors to see if the company’s asset declined in value, otherwise, it may over estimate its true net worth and the company will go bankruptcy. This gives Enron to have the appearance to become a profitable company even if it wasn’t.
Here comes the LJM partnership that was built to bolster the Enron company’s asset. LJM stands for Lea, Matthew, Jeffrey, the names of Andrew Fastow’s wife and two children by that time. Andrew Fastow, the former Chief Financial Officer of Enron, made a network of shell companies in purpose of giving Enron money to hide its increasing debt. This partnership caused the company to regain its stand and became even more successful until the California energy crisis. Significant rises in energy prices has began and thousand hundred of people were affected by the black out. Many companies had gone bankruptcy, like gas and electricity company blaming Enron of their down fall and accusing them of market manipulation.
Market manipulation is the fact that people like the stock brokers, traders, analyst or bankers interfere with the market’s pricing on a product, security, commodity and currency by using incorrect and deceptive information. Competition and profit are both essential to work in this market. In fact, market manipulation is illegal in most of the countries, and one of this is the United States of America. It is banned under the Securities Exchange Act of 1934. But despite of this, there is still an agreement that Wall Street brokers would still do anything to earn a profit even if it will damage other investors in the process. Market manipulation has many types and one of these is insider trading which is shown in the film Enron. Insider trading, the most well-known type of market manipulation, relate to the insiders who uses confidential information into their benefits. Kenneth Lay, the founder of Enron Corporation, and Jeff Skilling, they manipulated the company’s accounting and stock market making their reports increase and secrete their debts to fool their investors resulting them to lose over $70 billion. Because of this, thousands of workers at Enron have lost their job as well as their life savings.
The California energy crisis led Enron into its bankruptcy and all of its fraud started to unravel. This headed the company to collapsed which cause more amployees to lose their jobs and their life savings, while investors lose over $11 billion in shareholder value.