The recent amendments to the Commodity Exchange Act essentially codified the 
prior regulations on this point.  If this technique was effective in 1998 it 
should still be effective today.



	Guenther Klar
	05/03/2001 03:32 PM
		 
		 To: Jonathan Marsh/EU/Enron@Enron, Mark Taylor/HOU/ECT@ECT
		 cc: Catharina Clabots/LON/ECT@ECT, Julie Watt/EU/Enron@Enron, Janine 
Juggins/LON/ECT@ECT
		 Subject: Reorg - Capitalisation of LLC

here's the note i referred to in my email just now.

---------------------- Forwarded by Guenther Klar/LON/ECT on 03/05/2001 21:31 
---------------------------


Rajen Shah
03/05/2001 17:35
To: Guenther Klar/LON/ECT@ECT
cc:  

Subject: Reorg - Capitalisation of LLC

I think there is a fax from Doug Harris on the reorg file with the CFTC 
rules. I will try to find it.
---------------------- Forwarded by Rajen Shah/LON/ECT on 03/05/2001 17:35 
---------------------------


Rajen Shah
15/12/1998 17:53
To: Rod Sayers/LON/ECT@ECT, Paul Simons/LON/ECT@ECT
cc:  

Subject: Reorg - Capitalisation of LLC

Telecon with Douglas Harris (AA New York):

1. The "$10m total assets" requirement technically needs to be satisfied at 
all times.

2. No clear definition of total assets but his view is that total assets on a 
US GAAP basis should be satisfactory.

3. If the LLC were to issue an interest free note to an Affiliate and on 
lends the proceeds to Affiliate 2 then the receivable from Affiliate 2 would 
qualify for the $10m total assets test.

4. If the LLC were to issue an interest free note to an Affiliate and the 
proceeds are used to fund on going trading then if due to losses total assets 
were to fall below $10m then technically LLC would need to top up total 
assets for the losses incurred.

It would appear from the above that the most effective route is to fund the 
LLC by way of an interest free loan and for the LLC to on lend to affiliates.