Why Enron Became A Middle Man Company - 1133 Words

With the changing of the economy in the late 1990s, as the old millennium was ending and the new one beginning, one particular company discovered a new way to rise to the top in the trading business. Enron, originally known as a â€Å"natural gas pipeline company [started by Kenneth Lay in 1985], soon became known as an energy-trading corporation that bought and sold gas as well as electricity.† (Fox, 1). With over 20,000 employees and 40 worldwide businesses, The Houston, TX Corporation soon became a prodigy of the times. Originally it made its profit by promising to deliver a particular amount of gas to certain businesses at market price on particular days. (O’Harrow Jr.). Soon, Enron became a middle man company, placing it between buyers and sellers and making money off of the difference between the selling and buying prices. Their books were kept closed to each opposing party, making Enron the only one to know both prices. (O’Harrow Jr.). After entering many complex and intense contracts, the corporation entered into business with Arthur Andersen, an accounting firm who handled Enron’s auditing. (Fox, 6). Enron had complex services and high rising stocks. At the top of the game, Enron was a company worth about $70 billion; its stocks were trading at a rate of $90 a share, and seemed indestructible. Explanation of how Enron worked with the idea of supply and demand (Phoenix) Enron’s muddy details In mid-1999, Enron’s chief CFO, Andrew Fastow, set up two partnershipsShow MoreRelatedThe Pressures Of Running A Successful Business1177 Words   |  5 Pageswho became bankrupt and was forced to shut down his prestigious ninety-year-old auditing company, finding himself in the middle of several scandals, but one in particular befell him for good. 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