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Enron faces SEC probe
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October 22, 2001: 1:19 p.m. ET
SEC asks energy trading firm to provide information on certain transactions.
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NEW YORK (CNNmoney) - The Securities and Exchange Commission has requested information from Enron Corp., reportedly concerning a partnership organized by the company's chief financial officer.
Enron confirmed Monday it received a request from the SEC last week for information on regarding "certain related party transactions."
Shares of Enron (ENE: down $5.30 to $20.75, Research, Estimates) fell more than 20 percent in afternoon trading on the New York Stock Exchange.
Last week it was reported that a partnership organized by Enron's chief financial officer, Andrew Fastow, generated millions of dollars in profits from transactions with the Houston-based energy trading company, which resulted in Enron losing $1.2 billion in market equity.
"We welcome this request," Enron's Chairman and CEO Kenneth Lay said. "We will cooperate fully with the SEC and look forward to the opportunity to put any concern about these transactions to rest."
The SEC declined to comment.
Enron's most notable transaction with the partnership, LJM2 Co-Investment LP, involved the partnership's purchase of 55 million Enron shares in exchange for a note, with the aim of hedging against certain technology investments. When the value of Enron's stock and the investments dropped, Enron repurchased the shares at the lower price and cancelled the partnership's note.
An Enron spokesman said the company is unable to go into specifics about when the information will be provided, or how long the process is expected to take, but said all transactions have been fully reported by the company to the SEC.
The Houston-based company said its auditors, attorneys and board reviewed and approved the "related party arrangements," and they were disclosed in its SEC filings. "We believe everything that needed to be considered and done in connection with these transactions was considered and done," Lay said. 
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