On December 2, 2001, the giant energy trader Enron filed for bankruptcy. Although the company was based in Houston, Texas, it filed for bankruptcy in New York City, New York. Enron’s failure, which is also associated with the bankruptcy of the accounting firm Arthur Anderson, was the first financial scandal of the 21st century.
 
Enron enjoyed enormous success when it was established in the 1980s. However, major declines in value were hidden from shareholders by poor financial reporting. In the days—and sometimes minutes—leading up to the bankruptcy, Enron executives sold their stock. Enron and Anderson were effectively put out of business, and some Enron executives were sentenced to years in prison for fraud and insider trading.
 
Enron filed for Chapter 11 bankruptcy protection. Under this legal code, Enron was able to maintain control of most of its assets under the oversight of the bankruptcy court. In the end, Enron paid more than $7 billion to its shareholders (mostly the University of California system).
account
Noun

oral or written description of events.

asset
Noun

property or another valuable item that is possessed by someone.

associate
Verb

to connect.

bankrupt
Adjective

unable to pay debts.

decline
Verb

to reduce or go down in number.

effective
Adjective

useful or able to perform a task.

energy trader
Noun

person who buys and sells units of electricity, usually for a public or private energy company.

enormous
Adjective

very large.

establish
Verb

to form or officially organize.

executive
Noun

person with a high amount of authority and power in a company or business.

financial
Adjective

having to do with money.

fraud
Noun

lie, trick, or misrepresentation played to gain goods and services.

insider trading
Noun

illegal buying and selling of stocks based on secret information.

oversight
Noun

supervision.

prison
Noun

buildings that house convicted criminals and people accused of a crime and awaiting trial.

scandal
Noun

publicly damaging or shameful circumstance or situation.

shareholder
Noun

part-owner of a company.

stock
Noun

share in a company or business.