What happened to LJM?
The cause of the collapse was fairly simple: LJM was betting against volatility through a strategy known as ‘shorting volatility’. Unfortunately, the volatility index (VIX) experienced one of the largest spikes in history which is what sent LJM spiraling. “LJM strategies have suffered significant losses.
How did LJM Enron work?
In most cases LJM served as a “warehouse” for assets so that Enron could record sales when it wanted to and avoid reporting losses, such as those encountered with the Cuiaba power plant in South America, which had no gas supply among other problems.
Which Enron employee was running the LJM partnership?
Skilling said Fastow told him about Enron employee Michael Kopper’s role in the partnerships, but not the others’. Skilling testified that he believed Fastow was to make $5 million over five years — not $30 million — from what were called the LJM partnerships.
How much money did Andy Fastow make from LJM?
Besides the $30 million he made in the LJM partnerships, Mr. Fastow earned a hefty salary and stock options at Enron. In 1999 and 2000, he sold about $23 million in Enron stock.
What did Andy Fastow do wrong?
Fastow pleaded guilty to securities and wire fraud in 2004. Fastow testified extensively against Enron Chief Executive Officer Jeffrey Skilling at trial and was sentenced to six years in prison.
Which bank invested in LJM?
Subcommittee investigators said Enron – struggling with a secretly crumbling balance sheet – obtained financing of $8.5 billion over nine years from Citigroup Inc. and J.P. Morgan Chase & Co., which took in hefty fees and interest payments.
How did Fastow hide debt?
Fastow was one of the key figures behind the complex web of off-balance-sheet special purpose entities (limited partnerships which Enron controlled) used to conceal Enron’s massive losses in their quarterly balance sheets.
What did Fastow do at Enron?
Fastow pleaded guilty to securities and wire fraud in 2004. Fastow testified extensively against Enron Chief Executive Officer Jeffrey Skilling at trial and was sentenced to six years in prison. Today, Fastow says he accepts his actions were wrong.
What was the Arthur Andersen scandal?
On June 15, 2002, Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron, resulting in the Enron scandal. Although the Supreme Court reversed the firm’s conviction, the impact of the scandal combined with the findings of criminal complicity ultimately destroyed the firm.
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