Enron was an energy trading and communications company based in Houston, Texas employing around 21,000 people (mid-2001). It was once the seventh largest company in America, and expected to dominate the trading it had virtually invented in communications, power and weather securities.
After a series of scandals involving irregular accounting procedures bordering on fraud, Enron stood at the verge of undergoing the largest bankruptcy in history by mid November 2001. A white knight rescue attempt by a much smaller energy company, Dynergy, was not viable.
The fall of the value of investors' equity per share in Enron during 2001, from $85 to 30 cents, would be remarkable for any company. As Enron was considered a blue chip stock, this is an unprecedented and disasterous event in the financial world.
Enron was formed in 1986 with the merger of Houston Natural Gas and InterNorth. It was originally involved in the transmission and distribution of electricity and gas throughout the United States and the development, construction and operation of power plants, pipelines etc worldwide.
Enron grew wealthy by its pioneering marketing and promotion of power and communications bandwidth commodities, and related risk management derivatives as tradable securities, including exotic items such as weather derivatives.
As a result Enron was named "America's Most Innovative Company" by Fortune for five consecutive years, from 1996-2000. It was on Fortune's "100 Best Companies to Work for in America" list of 2000, and was legendary even amongst the elite workers of the financial world for the opulence of its offices.
Its global reputation was undermined however by persistent rumours of bribery and political pressure to secure contracts in Central and Southern america, Africa and the Phillipines. Especially controversial was the $30bn contract with the Indian MSEB (Maharashtra State Electricity Board).