He stole millions of dollars out of people’s life savings by falsely investing the money they gave him. All for the possession of paper that we give value to. Many took their lives because they had nothing left. In the many ways humans try to be better and more powerful than one another; they can create moral flexibility. This is, in essence, saying that certain rules only apply to everyone else: creating hypocrisy.
One reason is because of margin trading. When one does this one borrow money from a broker who borrows money from a bank. If the stock goes up everyone makes money, but if it goes down then everyone loses and eventually the owner has to sell his stock. Thus depressing the market even more. In addition to that, the stock market crashed because of a weak-banking system and because of the fact that the Government allowed businesses to make decisions even if it hurt everyone else.
With a pay package that included more than seven million shares and options, Dunlap stood to make more than $200 million personally if he could keep Sunbeam's stock price flying. In the spring of 1998, when Dunlap and his team ran out of tricks, Sunbeam corrected its books, declared bankruptcy, and the stock price plunged from $53 at its peak to just pennies today. In an ominous harbinger of the Enron scandal, the SEC discovered that Andersen accounting documents had been destroyed. In the case of Waste Management -- which in 1998 issued the largest corporate restatement before Enron -- the company had exaggerated its earnings by $1.7 billion. The SEC's investigation found a long-running cover-up -- not just by Waste Management, but by Andersen as well.
They would then go out of business and/or sell to JDR. Then JDR would jack his prices back up. JDR also got control in the railroads so that you couldn't afford the transportation cost, where as JDR was getting a discount. JDR used lots of leverage in gaining his monopoly over oil. Tactics today would be criminal and stopped dead with lawsuits.
The Great Depression was unexpected, yet inevitable. The stock market prices were inflated to nearly breaking point, but there were no actions to show for it. Eventually, people started to realize nothing was resulting from all the stock buying - and panicked. Everyone started selling as much as they could, as fast as they could so they could still make some profit. The major economic figures of the time tried to sustain the stock market by investing all they could, but to no avail - the prices took a huge tumble, and it would be a long time before they would manage to rise up again.
I chose to write about Lou Pai, the mystery man, because he was more intriguing than any of the other executives, not to mention he was the only one who escaped federal prosecution. Like the other executives at Enron, Pai was consumed with numbers (money) but also had an odd interest in strippers. This fascination with strippers later led to his divorce, which caused Pai to leave Enron, cashing in approximately 250 million dollars. The Divorce couldn’t have come at a better time because Enron went bankrupt shortly thereafter (approximately six months later). Pai’s strange fetishes and behaviour portrays him as a very unscrupulous person.
Andersen shunted aside accountants who failed to adapt to the firm's new direction. In their place, Andersen promoted a slicker breed who could turn modestly profitable auditing assignments into consulting gold mines. Repeatedly, Andersen rewarded those involved with the firm's most troubled clients, while guardians of the company's legacy were shown the door. The quiet dilution of standards and the rise of auditor-salesmen at Andersen are central to the scandals that have cost investors billions of dollars. Even though the leaders contended that conflicts between its auditing and consulting missions had no impact on the quality of its work but actually they do.
Consumers bought their goods when, in theory, they did not have the money to do so. Because they did not have enough money to pay, they would “buy now, pay later.” It is inevitable that consumers would lower their purchasing after this (Document H). Once the people do not have the money to keep their purchasing habits, they will ruin the whole economy. Another way the people ruined the economic system, was by buying on a margin. The people thought that they were living great, because their stocks were doing so well.
In 1990, Enron’s CFO Jeff Skilling hired a well knowledgeable businessman by the name of Andrew Fastow who was well known for his works in the deregulation of the energy market. Enron’s company grew mainly due to the marketing and promoting its stock prices. Ex-employees stated the company posted current stock prices in elevators, bathrooms and other available areas of the building. From 1996 to 2001 they were named “America’s Most Innovative Company” by Fortune magazine and also made the “100 Best Companies to Work for in America in 2000. The case of Enron is said to be a “smoke and mirrors” act dictated by top executives presenting the positive financial wealth of the company.
The firm’s senior managers had engaged in fraud for an extended period through a scheme in which partnerships owned by the managers could receive payment for goods and services never provided to Enron. Enron’s executive team was trying to create an enterprise, which would increase wealth among their shareholders. However, when it revealed that their stock prices were less desirable, certain aggressive accounting measures were required. Arthur Andersen, auditor and consultant to Enron, helped to make Enron’s shares look more favorable. Andersen knowingly certified false financial statements as accurate.