Fifteen years ago this month, the Enron Corporation filed for Chapter 11 bankruptcy, bringing to light one of the largest corporate scandals in US history.
Formed in 1985, Houston-based Enron was “an energy-trading company” that resulted from the merger of two gas companies, Houston Natural Gas and Internorth. In a very short time, Enron rose as high as number seven on Fortune magazine’s list of the top 500 US companies, employed over 30,000 people and posted revenue of $111 billion.
By all accounts, Enron was a darling of Wall Street, world leaders, legislators, as well as the press. For example:
The Enron story ends sadly with the staggering collapse of one of America's largest corporations, affecting thousands of employees, wiping out $1.2 billion of Enron employee’s retirement and shaking Wall Street to its core (for at least a little while).
It was just a short time later, unfortunately, that Enron’s position as the largest bankruptcy in US history ended, as the following year we witnessed WorldCom and a few years later we saw the bankruptcies of Washington Mutual and Lehman Brothers occur within 11 days of each other in 2008. And to this day, the filing of Chapter 11 by Lehman remains as the largest bankruptcy filing in US history.
What Enron Lessons Do Investors Need To Remember?
It is likely, however sad this statement is, that we will see another Enron. In fact, some are comparing the fraud at Wells Fargo with what happened at Enron and it remains to be seen if this is an accurate comparison or not. Nevertheless, if you take a common-sense approach to investing and work alongside an experienced financial advisor, you should be able to avoid making an Enron-type investing mistake in the future.