Stuff You Should Know

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Selects: How Enron Fooled the World

Explore episode Jun 27, 2026
Business
The Whistleblower: Sharon Watkins and the Letter to Ken Lay

Selects: How Enron Fooled the World · Jun 27, 2026 Business

After Jeffrey Skilling's sudden resignation in August 2001, Enron executive Sharon Watkins wrote an anonymous letter to Ken Lay warning that the company's accounting was a fraud waiting to collapse. When she revealed herself as the author and met with Lay, he consulted lawyers on how to fire her. She was later named Time's Person of the Year.

Where this was said

Early Warning Signs: McLean, Chanos, and the First Doubters

At 40:00 · chapter starts 38:30

Josh walks through the handful of people who saw through Enron before everyone else. Jim Chanos of Kynikos Securities was the first to act, beginning to short Enron stock in 2000 after making a simple observation: the company's cost of capital was higher than its return on investment, making it mathematically unprofitable — directly contradicting its stellar earnings reports. He made hundreds of millions in the eventual collapse. Bethany McLean, who would go on to co-write 'The Smartest Guys in the Room,' published 'Is Enron Overpriced?' in Fortune in March 2001, among the first public challenges to the company's finances. Both were dismissed or harassed by Enron executives, who used the standard response: 'You just can't understand our business model.'

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