30 July 2002: Sarbanes-Oxley signed into law
President George W. Bush signed the Sarbanes-Oxley Act, a response to the accounting scandals at Enron, WorldCom and others. It required chief executives and finance chiefs to personally certify their financial statements, toughened penalties for fraud and created a new board to oversee auditors. Companies grumbled about compliance costs. But investors gained something valuable: a bit more reason to believe the numbers they were reading.
The lesson: Reliable financial statements are the foundation of investing; without trust in numbers, valuation is guesswork.
What it meant for investors
$1,000 in Enron at the start of 2000 → $0 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2000, the latest year on the wheel. Enron went to zero, so the position is worth nothing at all; the index turned the same money into $4,626.
What Enron teaches: If you cannot understand how a company makes its money, the market may not either; complex accounting and opaque disclosures are warning signs, not features.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 1990 | $5.00 | $0 | $19,429 |
| 1995 | $15.00 | $0 | $14,783 |
| 2000 | $44.00 | $0 | $4,626 |
green = beat the S&P 500 · red = lost money
What if you bought Enron? Every starting year and the full story →
More Enron history
- 22 October 2001: Enron reveals the SEC is asking questions
- 2 December 2001: Enron files for bankruptcy
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
Play Sixty-40