Why investors are still at risk of being scammed by companies

The collapse of Enron, which filed for bankruptcy 20 years ago, was a shock to the capital markets and led to the disappearance of Arthur Andersen, the accounting firm that had relied on Enron's annual accounts despite fraud. The resulting scandal has led to new rules and laws for corporations and auditors aimed at making it impossible for fraud of this magnitude to continue.

For two decades, such events did not disturb the American markets. However, it is unclear whether investors are safer now than they were before Enron's bankruptcy.

By the time Enron failed, Arthur Andersen had already become an accomplice in fraudulent schemes at Waste Management, Sunbeam Products, and the Baptist Foundation of Arizona. It soon became known about the deception of even greater proportions at WorldCom, which was also a client of Arthur Andersen. Following this incident, the US Securities and Exchange Commission ( SEC) fined the auditor $7 million, sanctioned four of the company's partners, and issued an order prohibiting any further violations of securities laws.