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unpublished (confidential) price-sensitive information.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.