Risky Business
The following is a chronology of key events for WorldCom Inc., Adelphia, ImClone, Enron, and Arthur Andersen.
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Enron says U.S. Securities and Exchange Commission (SEC) is looking into a possible conflict of interest related to transactions between Enron and the Fastow partnerships. Two days later, Enron ousts Fastow.
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Under the direction of the chief auditor for Andersen's Enron account, David Duncan, the accounting company begins a two-week document destruction effort of Enron-related paperwork shortly after learning the Securities and Exchange Commission was asking Enron for accounting information. Duncan later tells congressional investigators the destruction of documents was ordered from higher up.
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As part of its investigation into Enron, the SEC subpoenas Andersen for Enron documents. Enron files documents with SEC saying it overstated earnings dating back to 1997 by almost $600 million. The next day, Enron agrees to a deal in which smaller rival Dynegy Inc.will buy Enron for some $9 billion in stock. As part of the deal, Chevron Texaco agrees to inject $1.5 billion in fresh capital immediately.
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The destruction of Enron documents ends when Duncan's assistant e-mails secretaries to "stop the shredding."
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Major credit rating agencies downgrade Enron's bonds to "junk" status. Dynegy terminates its agreement to buy Enron. Enron temporarily suspends all payments, other than those necessary to maintain core operations. Enron stock hits a new low of 70 cents amid the heaviest single-day trading volume ever for a NYSE or Nasdaq-listed stock.
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Enron files for Chapter 11 bankruptcy and hits Dynegy with a $10 billion breach of contract lawsuit. The following day, Enron fires 4,000 employees. Dynegy countersues for control of Enron's Northern Natural Gas Pipeline.
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Enron secures $1.5 billion in emergency financing, provided by major creditors J.P. Morgan Chase and Citigroup, so it can run a skeleton operation.
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Congressional hearings begin on Enron's collapse, while the company announces plans to raise up to $6 billion by selling assets. The next day, executives from accounting firm Andersen tell Congress they warned Enron about "possible illegal acts" after the energy trading giant failed to provide crucial data about it finances to Andersen.
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Tearful Enron employees and investors tell a congressional committee how they lost their life savings in the collapse. Enron Chief Executive Kenneth Lay scheduled to appear before the Senate Commerce Committee on Feb. 4.
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Martha Stewart, chairwoman and chief executive of her own multimedia company and a board member of the board of the NYSE, sells almost 4,000 shares of ImClone stock. The next day, the Food and Drug Administration announces that it will not consider Erbitux, ImClone's experimental cancer drug.
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The Justice Department opens a criminal investigation of Enron.
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Andersen admits its employees disposed of or deleted a number of documents relating to Enron's audit. President George W. Bush, who received major campaign contributions from Enron, orders government reviews of U.S. pension rules and corporate disclosure rules.
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WorldCom receives a request for information from the U.S. Securities and Exchange Commission relating to accounting procedures and loans to officers.
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With 5.7 million subscribers in 32 states and Puerto Rico, Adelphia discloses that the Rigas family had borrowed $2.3 billion through various family-owned partnerships. The debt had been kept off the company's balance sheet and the company says it may be liable for some of the debt. Adelphia's stock drops 18 percent.
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Adelphia acknowledges that it may be liable for as much as $500 million in debt it guaranteed for Adelphia Business Solutions Inc.
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Adelphia says in a Securities and Exchange Commission filing that it needs more time to review its accounting and will not meet the deadline for filing its annual 10-K financial statement. Stock closes at $13.12.
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The first in a flurry of shareholder lawsuits accuses Adelphia of misleading stockholders by failing to disclose the off-balance-sheet debt, and alleges that a drop in the stock price was "in response to these negative announcements."
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WorldCom says it is cutting 3,700 jobs in the U.S. or six percent of WorldCom group's staff, four percent of WorldCom's overall workforce. Adelphia says the SEC is conducting an informal inquiry into the off-the-books debt.
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Adelphia announces it has hired three investment banks as financial advisers to explore possible cable asset sales and other ways to reduce debt.
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Adelphia reveals that the SEC had opened a formal investigation into its accounting practices.
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Standard & Poor's cuts WorldCom's long-term and short-term corporate credit ratings. The following day, Moody's Investors Service cuts WorldCom's long term ratings. Fitch cuts the company's ratings, saying it expects WorldCom's revenue to deteriorate during 2002, with prospects for recovery in 2003 uncertain.
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WorldCom Chief Executive Officer Bernard Ebbers resigns amid slumping share price and SEC probe of the company's support of his personal loans. Vice Chairman John Sidgmore takes reins of company.
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Credits:
CBS, The Associated Press
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