The Sarbanes-Oxley Act of 2002

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in Iowa. However, in 1999, the company ended its retail endeavor, only offering wholesale energy as it was revealed it was spending upwards of $100 million a year. Data Management As fiber optic technology progressed in the 1990s, multiple companies, including Enron, attempted to make money by "keeping the continuing network costs low," which was done by owning their own network. In 1997, FTV Communications LLC, a limited liability company formed by Enron subsidiary FirstPoint Communications, Inc., Williams Communications Group, Inc. and Touch America. FTV constructed a 1,380 mile fiber optic network between Portland and Las Vegas. In 1998, Enron constructed a building in a rundown area of Las Vegas near E Sahara, building right over the "backbone" of fiber optic cables providing service to technology companies nationwide. The location had the ability to send "the entire Library of Congress anywhere in the world within minutes" and could stream "video to the whole state of California." The location was also more protected from natural disasters than areas such as Los Angeles or the East Coast. According to Wall Street Daily, "Enron had a secret," it "wanted to trade bandwidth like it traded oil, gas, electricity, etc. It launched a secret plan to build an enormous amount of fiber optic transmission capacity in Las Vegas ... it was all part of Enron’s plan to essentially own the internet." Enron sought to have all US internet service providers rely on their Nevada facility to supply bandwidth, which Enron would sell in a fashion similar to other commodities. In January 2000, Kenneth Lay and Jeffrey Skilling announced to analysts that they were going to open trading for their own "high-speed fiber-optic networks that form the backbone for Internet traffic". Investors quickly bought Enron stock following the announcement "as they did with most things Internet-related at the time", with stock prices rising from $40 per share in January 2000 to $70 per share in March, peaking at $90 in the summer of 2000. Enron executives obtained windfall gains from the rising stock prices, with a total of $924 million of stocks sold by high-level Enron employees between 2000 and 2001. Head of Enron Broadband Services, Kenneth Rice, sold 1 million shares himself, earning about $70 million in returns. As prices of existing fiber optic cables plummeted due to the vast oversupply of the system, with only 5% of the 40 million miles being active wires, Enron purchased the inactive "dark fibers", expecting to buy them at low cost and then make a profit as the need for more usage by internet providers increased, with Enron expecting to lease its acquired dark fibers in 20 year contracts to providers. However, Enron's accounting would use estimates to determine how much their dark fiber would be worth when "lit" and apply those estimates to their current income, adding exaggerated revenue to their accounts since transactions were not yet made and it was not known if the cables would ever be active. Enron's trading with other energy companies within the broadband market was its attempt to lure large telecommunications companies, such as Verizon Communications, into its broadband scheme to create its own new market. By the second quarter of 2001, Enron Broadband Services was reporting losses. On March 12, 2001, a proposed 20-year deal between Enron and Blockbuster Inc. to stream movies on demand over Enron's connections was cancelled, with Enron shares Page 50 of 208
dropping from $80 per share in mid-February 2001 to below $60 the week after the deal was killed. The branch of the company that Jeffrey Skilling "said would eventually add $40 billion to Enron's stock value" added only about $408 million in revenue for Enron in 2001, with the company's broadband arm closed shortly after its meager second-quarter earnings report in July 2001. Following the bankruptcy of Enron, telecommunications holdings were sold for "pennies on the dollar." In 2002, Rob Roy of Switch Communications purchased Enron's Nevada facility in an auction attended only by Roy. Enron's "fiber plans were so secretive that few people even knew about the auction." The facility was sold for only $930,000. Following the sale, Switch expanded to control "the biggest data center in the world." Overseas Expansion Enron, seeing stability after the merger, began to look overseas for new possible energy opportunities in 1991. Enron's first such opportunity was a natural gas power plant utilizing cogeneration that the company built in Teesside, UK. The power plant was so large it could produce up to 3% of the United Kingdom's electricity demand with a capacity of over 1,875 megawatts. Seeing the success in England, the company developed and diversified its assets worldwide under the name of Enron International (EI), headed by former HNG executive Rebecca Mark. By 1994, EI's portfolio included Page 51 of 208
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Page 10 and 11: 4. Throughout the process, we encou
Page 16 and 17: Ecclesiastes 5:10 10 Whoever loves
Page 18 and 19: This work is not meant to be a piec
Page 20 and 21: ules to implement the Sarbanes-Oxle
Page 22 and 23: 4. Enhanced Financial Disclosures T
Page 24 and 25: The Senate Banking Committee undert
Page 26 and 27: Senator Sarbanes's bill passed the
Page 28 and 29: Lord & Benoit issued a research rep
Page 30 and 31: Implementation of Key Provisions Sa
Page 32 and 33: Sarbanes-Oxley Section 404: Assessm
Page 34 and 35: during 2004 U.S. companies with rev
Page 36 and 37: Central Railroad Company Turin v. A
Page 38 and 39: These regulations are damaging Amer
Page 40 and 41: Strategist, Mr. John (Jack) R. Demp
Page 42 and 43: Minimum requirements for risk manag
Page 44 and 45: ankruptcy Enron. On September 7, 20
Page 46 and 47: Enron still had some lingering prob
Page 48 and 49: 1989 Enron launches Gas Bank, th
Page 52 and 53: assets in The Philippines, Australi
Page 54 and 55: Enron's debts and the losses that i
Page 56 and 57: Enron has been featured since its b
Page 58 and 59: trading deregulation. Despite warni
Page 60 and 61: It was also an extensive futures tr
Page 62 and 63: EnronOnline Enron opened EnronOnlin
Page 64 and 65: Project Summer During the summer of
Page 66 and 67: Marc F. Racicot, Republican Nationa
Page 68 and 69: Finally, it is important to note th
Page 70 and 71: auditing, and make sound financial
Page 72 and 73: may grow accustomed to the financia
Page 74 and 75: Under Sarbanes-Oxley, CEO and CFO c
Page 76 and 77: o o If such loans are provided, the
Page 78 and 79: An organization must develop proced
Page 82 and 83: components of a sixty-sixpage statu
Page 84 and 85: The corporate hysteria about SOX co
Page 86 and 87: which governance was sold to the no
Page 88 and 89: 1519 and 2232(a), which arose out o
Page 90 and 91: case-in-chief because Yates had fai
Page 92 and 93: to records, documents, or tangible
Page 94 and 95: Background Petitioner John L. Yates
Page 98 and 99: statements and that the external au
Page 100 and 101:
Is It Time for an Audit? by Jeanne
Page 102 and 103:
Notes _____________________________
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About The Author John C (Jack) John
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The Sarbanes-Oxley Act of 2002

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