Houston Natural Gas and Internorth joined to establish Enron in 1985. As a tremendously diversified corporation that plays in the financialization of energy goods and the natural gas market, it would become a dominant player in the American energy markets. In the 1990s, the company’s expansion and good fundamentals made it a Wall Street favorite. Enron had sustained year-over-year revenue growth, a robust balance sheet, and a low debt-to-equity ratio. Enron’s peak market cap was $60 billion, 70 times its earnings. Through byzantine accounting methods and loopholes, the corporation misrepresented its fundamentals to investors. The corporation masked a significant amount of debt by discharging it into a series of SPVs as a sin bin for its financial issues. SPVs were kept off the books of the main public business, giving the appearance of higher performance than quarterly financials showed. Arthur Anderson presumably omitted the SPVs from its audits of the company’s financials and tried to cover them up afterward. After being convicted of obstructing justice, the company’s assets were auctioned in a fire sale.

Enron did some criminal things, but mostly followed the law. Enron was one of the first examples of legal fraud, in which numerous individual actions were legal despite a clear objective to deceive.