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‏Merrill Lynch
The brokerage and investment-banking firm Merrill Lynch also faced scrutiny by fed- eral prosecutors and the SEC for its role in Enron's 1999 sale of Nigerian barges.The replace- ment analyst is reported to have then upgraded his report on Enron's stock rating.Merrill Lynch went ahead with the deal despite an internal document that suggested that the transaction might be construed as aiding and abetting Enron's fraudulent manipulation of its income statement.There are also allegations that Merrill Lynch replaced a research analyst after his coverage of Enron displeased Enron executives.Merrill Lynch continued to use risky investment practices, which contributed to severe financial losses for the company as the economy entered a recession in 2008.Merrill Lynch allegedly bought the barges for $28 mil- lion, of which Enron financed $21 million.

‏ARTHUR ANDERSEN LLP
In its role as Enron's auditor, Arthur Andersen was responsible for ensuring the accuracy of Enron's financial statements and internal bookkeeping.However, shortly after speaking to Lay, Vice President Sherron Watkins took her concerns to an Andersen audit partner who reportedly conveyed her questions to senior Andersen management responsible for the Enron account.It is still not clear why Andersen auditors failed to ask Enron to better explain its complex partnerships before certifying Enron's financial statements.Investors used Andersen's reports to judge Enron's financial soundness and future potential and expected that Andersen's certifications of accuracy and application of proper accounting procedures would be inde- pendent and free of any conflict of interest.Some observers believe that the large consulting fees Enron paid Andersen unduly influenced the com- pany's decisions.

‏THE FALLOUT
Although Enron executives obviously engaged in misconduct, some people have ques- tioned the tactics that federal investigators used against Enron.Enron's demise caused tens of billions of dollars of investor losses, triggered a collapse of electricity-trading markets, and ushered in an era of accounting scandals that precipi- tated a global loss of confidence in corporate integrity.Each record holder of Enron Corporation stock on the day it was cancelled was allocated an uncer- tified, nontransferable interest in one of two trusts that held new shares of the Enron Corporation.Similarly, Prisma Energy International, Inc., which took over Enron's 19 international power and pipeline holdings, was sold to Ashmore Energy International Ltd.The third company, Portland General Electric, Oregon's largest utility, emerged from bankruptcy as an independent company through a private stock offering to Enron creditors.The defense was informed that 130 of Enron's top managers, who could have served as wit- nesses for the defense, were considered unindicted co-conspirators with Lay and Skilling.All remaining assets not related to Crosscountry, Prisma, or Portland General were liquidated.Therefore, the defense could not obtain witnesses from Enron's top management teams under fear that the prosecution would indict the witnesses.Legislation like Sarbanes-Oxley, passed in the wake of Enron, has placed more restrictions on companies.Four thousand former Enron employees struggled to find jobs, and many retirees lost their entire retirement portfolios.Under the plan, creditors would receive about two-thirds of the amount in cash and the rest in equity in three new companies, none of which would carry the tainted Enron name.The three companies were Crosscountry Energy Corporation, Prisma Energy International, Inc., and Portland General Electric.Crosscountry Energy Corporation would retain Enron's interests in three North American natural gas pipelines.In 2003, Enron announced its intention to restructure and pay off its creditors.

‏LEARNING FROM ENRON
Enron was the biggest business scandal of its time, and legislation like the Sarbanes-Oxley Act was passed to prevent future business fraud.It is unfortunate that the Enron scandal did not hinder corporate misconduct.The resulting recession affected the entire world, bankrupting such established companies as Lehman Brothers and requiring government intervention in the amount of nearly $1 trillion in Troubled Asset Referendum Program (TARP) funds to salvage numerous financial firms.Greed and corporate misconduct continued to be a prob- lem throughout the first decade of the twenty-first century, culminating in the 2008-2009 global recession.The eco- nomic meltdown inspired a new wave of legislation designed to prevent corporate miscon- duct, including the Dodd-Frank Wall Street Reform and Consumer Protection Act.How- ever, Enron still has lessons to teach us. Along with the business scandals of the financial crisis, Enron demonstrates that, first, regulatory agencies must be improved so as to bet- ter detect corporate misconduct.Corporations praised high performance at any cost, even when employees cut ethical corners.

‏The Enron scandal has become legendary.Many agree that Andy Fastow has made a contribution by taking responsibility for his misconduct and providing his per- spective on preventing accounting fraud.Enron's auditor, Arthur Andersen, faced over 40 shareholder lawsuits claiming damages of more than $32 billion.In April 2012, the Supreme Court denied his appeal, claiming that any errors made in the trial were negligible.In 2005, four years after the scandal, a movie was made about the collapse of Enron called Enron: The Smartest Guys in the Room.In 2009, the defunct com- pany agreed to pay $16 million to Enron creditors.Enron itself faced many civil actions, and a number of Enron executives faced federal investigations, criminal actions, and civil lawsuits.To this day, Jeffrey Skilling continues to maintain his innocence.It remains to be seen how he will conduct himself after release and how he will reflect on his role in Enron.However, a federal judge later reduced Skilling's sentence to 14 years.Skilling should be out of prison by the time you read this case.