UVA-F-1299 Rev. Feb. 8‚ 2011 This document is authorized for use only by Mattia Tenaglia at Tecnologico de Monterrey. Please do not copy or redistribute. Contact permissions@dardenbusinesspublishing.com for questions or additional permissions. ENRON CORPORATION’S WEATHER DERIVATIVES (A) Everybody talks about the weather‚ but nobody does anything about it.1 In October 2000‚ Mary Watts‚ the chief financial officer of Pacific Northwest Electric (PNW)‚ a utility servicing the Pacific Northwest
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The financial world was rocked by accounting scandals in the late 1990s and early 2000s. Companies such as Enron‚ Global Crossing and Tyco International collapsed under the weight of fraud and destroyed investor confidence in corporate accounting. But the biggest collapse was that of WorldCom. In 1983 Bernie Ebbers and several other people invested in a newly formed company in Clinton‚ Mississippi called Long Distance Discount Services‚ Inc. (LDDS). LDDS was a provider of long distance telephone
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involved. The company can also lose their exchange listing‚ lose of D&O insurance or face large 7+ figure fines. The act was a direct response to corporate scandals‚ such as WorldCom‚ Enron and Tyco who covered up or misrepresented questionable transactions. The scandals resulted in large losses including the closure of Enron and Arthur Anderson. This act applies to all US public companies as well as international companies that have “registered equity or debt securities with the Securities and
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Enron: The Smartest Guys in the Room Importance of Accounting Accounting is important because it manages the checkbooks of company which are important to analyses and determine the success of the business by looking through the different account statements and translating the company documents. An accountant or accounting firm starts and maintains auditing of a company. Accounting is also important because it offers a great assistance in planning the future investments as well as being able
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the executives employed at WorldCom. Before 2002‚ WorldCom was one of the top telecommunication businesses in its industry because of many acquisitions obtained by the company. Due to the increased popularity of the internet and the acquirement of UUNet and MCI Communications‚ WorldCom share significantly increased. According to Moberg and Romar (as cited in Browning‚ 1997) "By 1997‚ WorldCom’s stocks had risen from pennies per share to over $60 a share." WorldCom had become an attractive investment
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Case study on WorldCom THE WORLDCOM FRAUD:- Presented By: Pratik WorldCom’s Background • Awoke the sleeping giant by leading the telecom industry into profitability in the 90’s. • During the 1990’s‚ WorldCom was deeply involved in acquisitions and completed several “mega-deals” • Purchased over 60 firms in 2nd half of the 90’s • WorldCom moved into Internet and data traffic • Handled 50% of US Internet traffic • Handled 50% of e-mails worldwide WorldCom’s Background (cont.) • Purchased MCI for
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Based in Houston‚ Texas an American energy‚ commodities‚ and services company named ENRON CORPORATION was Ranked number 7 on the fortune 500 list in 2000‚ it was one of the most famous and largest integrated natural gas and electricity companies in the world. The company went bankruptcy on December 2‚ 2001. But before that it marketed natural gas liquids around the world and was working as one of the biggest natural gas transmission systems in the world‚ with transmissions over a massive area of
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The Smartest Guys in the Room It was a profound story happened between two giant companies‚ both of which once marked as one of the greatest companies for decades in the American History. Enron‚ started as Northern natural Gas Company in 1930‚ creatively making its way through the Great Depression by opening up the natural gas market with its lower cost and developing extensive pipeline network with the unlimited low-cost labor resource‚ fell apart due to its creative use of the SPEs and related
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The WorldCom scandal was actually brought to light by the internal auditor‚ Cynthia Cooper. Cooper and her team‚ Gene Morse and Glyn Smith uncovered the fact that line costs were being transferred to capital accounts. Cooper was originally tipped off to the fact that something was amiss when the head of WorldCom’s wireless business paid her a visit‚ upset that he was loosing $400 million that had been set aside to make up for shortfalls if customers didn’t pay their bills. Scott Sullivan‚ CFO of
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protect investors of corporations from the possible acts of fraudulent accounting activities by corporations. The SOX Act’s purpose is to commend and force ethical business practices among businesses across all industries. The overall goal was to protect financial records that organizations keep to help further protect against any and all accounting fraud. Major corporations like ENRON‚ TYCO‚ and WORDLCOM had to deal with major issues with reporting improper accounting records to investors and the
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