Enron - the Smartest Guys in the Room

The Smartest Guys In The Room

The Smartest Guys In The Room is a memorable representation of a corporate colossus. At the time of its failure, Enron was one of the largest corporations in the United States with more than 20,000 thousand employees. Enron failure happened so quickly by a culture of greed, fraud, and arrogance at the company’s highest levels. The Enron sudden collapse was the most shocking examples of executive piracy in America to blow its investors, creditors, employees, and auditors.

The video identifies and explains methods used by Enron’s management to accomplish their fraudulent organizations. One of the major failures of management integrity occurred when traders at one of the company’s subsidiaries were found to be engaged in irresponsible trading. Enron’s President, Ken Lay, was warned of these practices and of the possibility that Enron’s financial position was at risk due to the traders speculating beyond their authorized limits. Lay and senior management declined to bring the unprofessional traders under control because at the time they were apparently generating a significant portion of Enron’s profits. Indeed, Lay sent a message to the traders urging them to keep the profits coming. Fortunately, the trading losses were successfully diminished just in time to avoid a collapse. Shockingly, the incident was camouflage and never disclosed to Enron’s shareholders, becoming the first of a series of cover-ups and dishonest dealings by Enron’s senior management.

Those most seriously affected by Enron’s fraudulent management practices include the company’s employees, its shareholders, its creditors, and its auditors. Enron’s employees were encouraged and many were persuaded to invest their retirement savings in the company-sponsored 401(k) Plan. Thus, Enron’s management mislead thousands of its employees who worked for many years trusting that their investment would be safe and secure. This included employees of companies purchased by Enron whose 401(k) Plans were absorbed and invested in Enron’s stock. Of course, the most obvious losers were the company’s common and preferred shareholders and creditors who recovered little or nothing on the value of their