The rules are still evolving but have been a cat-and-mouse effort for more than a century.
>Valuations are always dependent on future expectations.
This is the point. The market is a very responsive organism. It is not easy for a group to reach the point where it can evolve faster than the market can adapt. For some though, this has always been the holy grail. Rarely does it work. When it does some people do get much richer much faster than otherwise, but by comparison the market is so huge it's still usually not a significant impact on the overall market.
Future expectations can have a tendency to become bigger than the "whole" market though. Even if not that massive it still represents more paper wealth that could be more quickly extracted than the same companies will be able to contribute in earnings over the same period.
You could say extracting this was built into the system to allow this type of "bottled wealth" to flow, or alternatively, a much wilder version has been reigned in to arrive at what we have now, in which Enron itself has been taken into consideration as much as it could be at the time.
There really shouldn't be much problem unless a highly leveraged entity gets so big so fast that it is no longer insignificant relative to the market niche it operates in, or even the whole market. If it's also "evolving" faster or more creatively than the market that's something too.
In that equation fraud does not need to exist, and is not necessarily a prominent term.
Nobody at Enron tried to defraud me even though in the end they failed to pay thousands in invoices. A single company built from a house of cards shows the textbook example of how outgrowing the ability of future expectations to deliver can cause bigger companies to collapse further and more abruptly than otherwise.
It would have been much worse if I had been a shareholder. But I was a valued contractor and everyone I had contact with was exceptional, sometimes the smartest person in the room.