October 8, 2002
John F. Kennedy School of Government, Harvard University

On December 2, 2001, Enron Corp. (together with its subsidiaries, collectively referred to in this report as “Enron”) filed for bankruptcy protection, making it – at the t ime – the largest company to declare bankruptcy in the nation’s history. Enron’s collapse deprived thousands of employees of their jobs, severely diminished their retirement savings, and led to the loss of billions of shareholder dollars. Perhaps most significantly, the company’s failure and the months of revelations that followed triggered a crisis in investor confidence in U.S. capital markets. The repercussions of Enron’s collapse continue to be felt today.

The misdeeds that led to Enron’s demise were, in the first instance and ultimately, the responsibility of Enron and its management. Enron, however, functioned within a larger environment consisting of private and public entities alike that were supposed to monitor or regulate the company’s activities and public disclosures. In January 2002, Senate Committee on Governmental Affairs Chairman Joseph I. Lieberman and Ranking Member Fred Thompson initiated a wide-ranging review of the actions of the various governmental and private watch dogs that were supposed to monitor Enron’s activities and help protect the public against these sorts of calamities. The Chairman and Ranking Member charged the Committee with examining whether these watchdogs did their jobs correctly and whether different actions by those watchdogs could have prevented – or at least detected earlier – the problems that have come to be associated with Enron.