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Tana,
State of incorporation has been captured for a large number of the counterparties and has been used as the basis for the determination of financial trading status by our tax group. If we are going to prevent a utility/gov/pension fund from trading financial products because of state law and we have state of incorporation, we should ensure that the entity we are barring is at least in the same state as the law in question. If this has not been the case, one way to update the information would be to list the states which have restrictive legislation and then apply the list to the companies for which we have state of incorporation information. An Excel Vlookup would accomplish this quite quickly. This is not perfect, but would at least ensure that utilities in states without the legislation are not barred - although I recognize it might bar some companies in states where the legislation may be so specific as not to preclude the trading of financial products for some utilities under certain circumstances. Frank: Could you please forward an updated list of state of incorporation information to Tana? One last point (thanks, Bob): If a particular state has restrictive legislation, is it our obligation to prevent the utility from trading financial products, or does the obligation rest with the utility? i.e. is there any reason for us to be barring them, or can we simply give them the ability to transact financial products with EnronOnline and rely on their internal controls? If we don't have any legal obligation to police, I'm reluctant to do anything which would imply we are assuming this responsibility. Mark: Can you comment on this last point? Thanks, Dave Enron Capital & Trade Resources Corp. From: Tana Jones 15/09/99 20:11 To: David Forster/LON/ECT@ECT cc: Mark - ECT Legal Taylor/HOU/ECT@ECT Subject: Re: State of Incorporation Our review of the counterparty list is not considering, for the most part, state of incorporation. The biggest consideration with derivatives is the country of incorporation (and additionally, the country(ies) in which trading will take place). For the bulk of our swap counterparties, i.e. energy companies, state law currently isn't an in issue on approval of swap trading. It is more of an issues with governmentals, utilities, insurance companies, pension funds and the like, and we do not capture that information until we are in active neogtiation with a counterparty. With utilities, you cannot make a general assumption that any particular state law that applies to one utility will apply to another. Each utility need to be looked at individually to see which state or federal law may apply to that counterparty. The bulk of you customer list is not financial counterparties we are in active negotiation with, so we are not capturing state of incorporation. I know the Global Contracts Group has been trying to capture that information. You may want to talk to Mary Gosnell.
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