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Enron Mail |
Cc: michael.brown@enron.com
Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: michael.brown@enron.com X-From: Paul Simons X-To: John Sherriff X-cc: Michael R Brown X-bcc: X-Folder: \Mark_Taylor _Dec_2000\Notes Folders\Notes inbox X-Origin: Taylor-M X-FileName: mtaylor.nsf As you probably all know, we are on the verge of launching credit derivatives trading in Europe and North America, both on Enron Online and off-line. This will involve quoting prices for buying and selling bankruptcy protection in respect of reference entities, many of whom are our counterparties in a variety of different commercial and financial contexts. This exciting cocktail of credit derivatives and Enron Online raises significant novel legal risks for Enron. Probably the most significant risk arises where Enron has confidential information about a reference entity and wrongfully uses that information in pricing the credit derivative on that entity. This could well result in legal proceeding against Enron. In practice, an allegation of misuse of confidential information can be very difficult indeed to defend without adequate procedures in place to safeguard that information. Against this background is the ever-present risk of "insider dealing". This crime - which carries a maximum prison sentence of 7 years and an unlimited fine - is committed where a person (or member of their family etc) deals in the securities (shares or bonds) of a listed company on the basis of unpublished (confidential) price-sensitive information. In addition, SFA rules require the safeguarding of confidential information, the misuse of which is a serious disciplinary matter. In order to ensure the success of this new business, we are now introducing new policies and procedures (attached) which include a simple Restricted List procedure. In essence they require you - to take prudent steps to safeguard confidential information within Enron to notify Michael Brown, Mark Elliott or myself if you become aware of confidential information (or circumstances) about a counterparty which you think might make it appropriate for that counterparty to be placed on the Restricted List. To make life easier, numerous examples of the types of information which might be relevant are set out in the attached procedures, so please familiarise yourself, and anyone else in your group you think appropriate, with them. As you will see, you are not expected to make difficult determinations about whether an entity should or should not be added to the Restricted List, just to let us know if you think there is a possibility that it should be added. We will also provide quick briefing sessions to ensure that each of you is comfortable with these new procedures. Many thanks for your co-operation.
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