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Enron was formed on May 1985, by merging InterNorth and Houston Natural Gas Company.

changed its name, after the Enron Case, to Enron Creditors Recovery Group. This company still exists
in order to pay the liabilities of Enron.
Enron Case has also affected its own employees, not only 4,500 employees has lost their jobs, but
also, because the employees bought its shares as they believed that their company has huge upside
potential, and were also convinced by Jeffery Skilling, a CEO of Enron, to invest in shares of Enron. As
a result, the annuity or the pension of the employees was all invested in the shares of Enron. Now,
their pensions are all gone.
Arthur Andersen, an auditing firm, which was one of the Big Five (PwC, Deloitte, Ernst and Young,
KPMG and itself), an auditor of Enron, after the Enron case, has dissolved (It was actually the biggest
auditing firm in the time of Enron case). The CPAs and the partners were able to transfer to the other
Big Four, as the firm was merged to the other Big Four firms. The real problem of this firm after the
Enron case was that the approximately 80,000 employees have lost their jobs in just one day and their
pensions also.
It also affected the economy, since the people lost their trust on the accounting information, the credit
levels of the companies has decreased, and it led to decrease in investments. And because of the
credit risks, the financing entities, like banks, have tightened the criteria for loans, and the companies
had difficulties to raise their funds. As the pressure of the funds, the companies used their inflows of
cash in settling their liabilities, rather than making an investment.
Because of an increase in liabilities of the companies, while the profits were decreased because of
9.11, and after that, Enron, there was a reduction in total cash flows in the economy, and this led to
an increase in surety bonds, many companies, like K-Mart (one of the 3 biggest retailing company in
US), have failed raising funds to operate, and experienced bankruptcy.
Citi Group, the one who has usually transacted with Enron, has reported $228,000,000 of net loss in
the year of the Enron Case.
Energy industry was affected. The companies in the industry were pressured to reduce expenses, sell
assets and make an improvement in financial conditions. Because of Enron, the risk in the industry
has increased and it increased a financial burden. The financing entities have increased its interest
rate by 1.5% per annum to the energy-related companies. Because of this, the construction of the
power stations, value of $12,000,000,000, has been postponed and this might have led to the power
shortage, when the economy started to recover and demands more energy.

There were amendments on the laws relating 401k (pension plan), so that the company would not be
able to use the pensions of its employees to invest in their own shares.
Sarbanes-Oxley Act was passed in 2002 to prevent accounting frauds and to strengthen punishment
on those responsible for the fraud. It gave birth to PCAOB (Public Company Accounting Oversight
Board), ensure the independence of the auditors, expansion of financial disclosures, protection on
whistle-blowers, and etc. It also prohibits a firm to give consulting services to the company which a
firm, at the same time, giving audit service. It demands the change of the auditor after 5 years of
auditing a client, and a partner of the firm is prohibited to work on accounting and financial services in
the client company within a year of his retirement.
US SEC immediately enters to an investigation when a person, who is not related to the stock market,

earns huge money in a short time.