This article records tradition as it has been passed down and reported. Its sources are not yet part of the atlas's verified catalogue.
Before October 2001, an American company could hide enormous liabilities from its own shareholders using an accounting device called a special purpose entity, a separate legal shell the parent company technically did not control on paper, whatever it controlled in practice. Enron, at the time the seventh largest company in the United States by revenue, used exactly this device to keep billions of dollars in debt off its own balance sheet, with its outside auditor, Arthur Andersen, signing off the whole way. When the structure collapsed, Enron collapsed with it, followed within months by WorldCom, and Arthur Andersen itself, an accounting firm that had existed for eighty-nine years, did not survive the year after that. Congress moved with a speed federal financial regulation rarely shows: Senator Paul Sarbanes and Representative Michael Oxley authored a bill that passed the House 423 to 3 and the Senate 99 to 0, and President George W. Bush signed it on July 30, 2002, less than a year after Enron first admitted its accounting was fictional. The Sarbanes-Oxley Act did not just punish what Enron had done. It rebuilt the machinery meant to catch the next one. It created the Public Company Accounting Oversight Board, a body with no equivalent before 2002, to inspect and discipline the firms that audit public companies, taking that job away from the accounting profession policing itself. It required a company chief executive and chief financial officer to personally sign their own name to the accuracy of the financial statements they filed, turning what had been a corporate assertion into a personal one with personal criminal exposure attached. It restricted how much consulting work an audit firm may sell to the very company it is supposed to be auditing without bias, the exact conflict of interest that let Arthur Andersen keep collecting Enron consulting fees while blessing Enron books. None of these provisions prevent fraud outright. What they do is remove the deniability that let Enron happen: no single named individual signed off on the deception, no single firm had a clean incentive to catch it, and no single watchdog existed to check the watchdogs. Twenty years later, the corporate scandals that still happen tend to look different in kind, not because dishonesty disappeared, but because the specific blind spot Enron exploited got closed.