Best-seller tackles Enron

Choosing a quality business book that will keep you entertained while teaching you valuable lessons can be a difficult proposition.

Sorting through Best Seller lists for business books is a tedious process.

"The Smartest Guys in the Room" – The Amazing Rise and Scandalous Fall of Enron, is a national best seller published in 2003, which describes in detail the creation and fraud of one of America's greatest former companies, Enron.

The book was written by Bethany Mclean, a former investment banking analyst for Goldman Sachs, and Peter Elkind, an award winning investigative reporter. Mclean and Elkind spent 16 months investigating, interviewing, and pouring over thousands of government documents to write this book.

Enron was an energy company located in Houston, Texas. It was formed in 1985 by former CEO Ken Lay, after merging Houston Natural Gas and InterNorth.

Enron grew to be the seventh largest company in the United States but declared bankruptcy in December of 2001. Millions of people were affected financially by the bankruptcy of Enron, and essentially all U.S. citizens were affected, once Sarbanes Oxley was proposed and enforced.

Roger Ebert, an American film critic and screen writer, said, "It tells the story of how Enron rose to become the seventh largest corporation in America with what was essentially a Ponzi scheme, and its last days looted the retirement funds of its employees to buy a little more time."

The authors claim, "This book is a story of people. We believe we have gained considerable insight into the thinking and behavior of virtually every major character in this book."

Students should consider reading this non-fiction book because of its many lessons.
It describes in detail the politics involved with working at a large corporation. It describes the importance of integrity and honesty when dealing with your company's financial statements, and how a publicly traded company must always look out for the best interest of its shareholders and creditors.

It's important that students develop an opinion when they read books about financial fraud and the role that government takes in preventing them. The book describes many times when the Securities and Exchange Commission was warned and flagged by employees of Enron, and no legal action was taken.

Students should also form an opinion on the impact that rating agencies had on Enron's bankruptcy. The rating Agencies had a conflict of interest while working with Enron. They made a lot of money because they were constantly rating Enron's new and old debt obligations. The rating agencies were pushed to give higher ratings on these bonds so they could reap future business from Enron. This is unethical, but how can rating agencies be regulated without government intervention?

To this day Enron's bankruptcy is one of the most famous and influential. Although in the past few years the bankruptcies of Lehman Brothers and Merrill Lynch have made history, Enron's bankruptcy tops them all.