Enron's collapse

Enron grew from a 1985 merger of two natural-gas pipeline companies into an energy-trading giant whose stock peaked above $90 a share in August 2000, built on complex financial instruments and a reputation for constant innovation that made it a Wall Street favorite. Much of that success rested on off-balance-sheet special-purpose entities that let the company hide debt and inflate reported profits while appearing far more stable than it was. As questions about those structures mounted through 2001, the Securities and Exchange Commission opened a formal investigation in October, and the stock collapsed from around $20 to just $0.26 within six weeks. Enron filed for bankruptcy on December 2, 2001, then the largest corporate bankruptcy in US history, wiping out thousands of jobs and employees' retirement savings that had been heavily concentrated in company stock. The scandal also destroyed Enron's auditor, Arthur Andersen, and prompted Congress to pass the Sarbanes-Oxley Act, reshaping US corporate accounting and governance rules.