What precipitated the collapse of Enron?
When the firm reported its third quarter results in October, it revealed a large, mysterious black hole that sent its share price tumbling. The US financial regulator – the Securities Exchange Commission – launched an investigation into the firm and its results. Enron then admitted it had inflated its profits, sending shares even lower. A potential buyer for Enron, shied away from the company, leaving it no choice but to file for bankruptcy on 2 December. The rapid demise of Enron from one of the most admired companies in the world to the US’ largest corporate failure has raised a great deal of suspicion surrounding its complex transactions. A host of different congressional hearings and regulatory investigations culminated in the announcement that a criminal inquiry is also underway. Why has a criminal investigation been launched? Because it is a possibility that senior executives at the firm were involved in fraud. In order to fiddle its balance sheets, the firm used complex financia
