On October 22, 2001, the Securities and Exchange Commission announced it was formally investigating Enron's suspicious dealings with partnerships controlled by CFO Andrew Fastow, characterizing them as "some of the most opaque transactions with insiders ever seen." Enron's share price immediately fell to $20.65, down $5.40 in a single day.
The SEC requested that Enron voluntarily provide information about related-party transactions with LJM2 and other partnerships created and managed by Fastow. Enron responded with a news release titled "Enron Announces SEC Request, Pledges Cooperation," attempting to project transparency while its fraudulent accounting schemes unraveled.
This investigation came just six days after Enron announced a $618 million quarterly loss on October 16, 2001. The same day the SEC announced its probe, CFO Fastow disclosed to Enron's board that he had earned $30 million from managing the LJM limited partnerships—a staggering conflict of interest that demonstrated the extent of corporate looting disguised as legitimate business practice.
Two days later, on October 24, Fastow was fired. Within six weeks, Enron would file for bankruptcy. The SEC's swift action represented the last major era of aggressive federal enforcement against corporate accounting fraud—a sharp contrast to the lack of prosecutions following the 2008 financial crisis and subsequent corporate scandals.