Richard,

At an earliier time in the NSM cases, I thought that we might argue that Enron
simply had nothing to do with the A and B bond offerings, that ECT Securities'
name appeared on the cover but Enron did nothing else.

Whether or not that would be a good position to take, it is clear to me that
the evidence will not support it. Enron did a great deal of diligence starting
in June of 1997 and continuing well after it became an "underwriter" in
November 1997 (after which, among other things, Enron received and commented
on drafts of the offering documents and road show slides.)  While we could
argue that we were only looking out for ourselves, I have no confidence that a
jury would buy that; and, in any event, I think it would be very unattractive
for us to say that we put our name on the cover just to get a fee and never
did anything at all to fullfill the duties of an underwriter.

Instead I think we should contend that Enron did a hell of a lot of work on
this transaction, looking into many differesnt aspects of the deal, that Enron
believed what it found and was told, that Enron asked a lot of questions of
Schultes, Healsey, Stickler, and Busse, that Enron believed and relied on
them, and that Enron invested $30 million of its own money (more than the
plaintiffs) because Enron sincerely believed in the deal..  We know now that
some of the things in the offering documents and road show slides were not
right, but Enron learned that only five or six months after the investors,
including Enron, put their money in.

On the basis of our meetings, I have asked Brian to take some time to put down
on paper an itemization of what Enron did to investigate the NSM transaction. 
A preliminary draft is attached.  I have asked Brian to go back and add names
of Enron and outside people involved in each of the analyses or investigations
that he has listed.
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                         
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