What US energy company's 2001 accounting scandal led to the Sarbanes-Oxley Act? Enron’s accounting scandal helped lead to the Sarbanes-Oxley Act.
Enron Corporation, based in Houston, grew from a natural-gas pipeline business into a major energy trader. Executives used techniques including mark-to-market accounting and special-purpose entities to make risky ventures appear profitable and to keep substantial debt and losses away from the main financial statements.
The crisis became public in 2001. Enron filed for Chapter 11 bankruptcy on December 2, 2001, after its share price collapsed and a proposed rescue by Dynegy failed. Its auditor, Arthur Andersen, was convicted of obstructing justice for destroying documents connected with the investigation; although that conviction was later overturned, the firm effectively disappeared from public-company auditing.
Congress responded to Enron and related scandals, especially WorldCom, by passing the Sarbanes-Oxley Act on July 30, 2002. The law created the Public Company Accounting Oversight Board, strengthened audit-committee rules, required senior executives to certify financial reports, and increased disclosure and internal-control requirements. WorldCom was another major scandal, but Enron is the canonical answer to this wording.