----- Forwarded by Richard B Sanders/HOU/ECT on 04/30/2001 06:42 AM -----

	showard@agsk.com
	04/27/2001 07:51 PM
		 
		 To: Richard.B.Sanders@enron.com
		 cc: 
		 Subject: NSM Update


Richard,

     The only significant deposition this week is taking place in Minneapolis.
 The deponent is Arthur Cobb, a disclosure/due diligence expert retained by
Robins, Kaplan in several cases in which Enron is not named.  Mr. Cobb's
report did not mention ECT Securities, and the California plaintiffs did not
designate him to testify in the CA cases, so we decided not to attend his
deposition.  We are getting daily transcripts by e-mail.

     Next week an expert designated by the CA plaintiffs on causation and
damage issues is being deposed in San Francisco.  Roland has a scheduling
conflict, so I am sending Jonathan Goldblatt.  The subject on which we want to
ask questions is damages relating to certain purchases by Farallon after the
initial offering.  This is a very discrete area, easy to understand, and
Jonathan is on top of it.

     I believe that you recently received a bill from Gerry McGrath.  Gerry
worked very hard on his report, putting in about 50% more hours than he
thought he would when he agreed to cap the total fee for his report.  He is
very focused on the requirement in his engagement letter that he be paid in 30
days.  I think Gerry did quite a good job, and we definitely need his best
effort going forward.  I would urge Enron to pay Gerry's bill very promptly.

     Farallon is currently threatening to move to compel further answers to
interrogatories from us.  It is much ado about nothing.  We just want to deal
with it in the least expensive way.

     Many of the plaintiffs have filed motions around the country, including
in CA, seeking to compel Natwest to produce more audio tapes of employee
conversations.  My guess is that the plaintiffs have found more good stuff,
and Natwest is trying to limit their losses.

     We are hard at work on the research that you and I have been discussing. 
It is frankly quite complex and involves several unanswered questions of law. 
The problem is that CA has a special statutory contribution provision (pro
rata, not relative fault) in the state securities statutes and a common law
doctrine of partial indemnity in tort actions that is based on relative fault.
 The later doctrine may not apply to the securities causes of action against
ECT Securities, but definitely applies to the common law fraud and negligent
misrepresentation causes of action.  How all of this works together is
virtually uncharted.

     With reference to your question about procedures at trial, none of the
defendants has cross-complained against the other defendants for a
determination of relative fault in the pending case; and, on the basis of the
current pleadings, no such determination will be made at trial.  If Enron goes
to trial and loses, along with others, theoretically the plaintiffs could
collect their entire judgment from Enron and leave Enron to pursue the other
defendants, post-trial, for their respective shares of the liability, whether
such shares are determined pro rata or by relative fault.  We are working on a
memorandum or outline that will lay all of this out for you.  I think you will
find that Enron has some powerful incentives to settle (assuming that we can
get the price low enough.)




Steve Howard
Alschuler Grossman Stein & Kahan LLP
phone: 310-407-7613
fax: 310-552-6077
cell:  213-716-0536
e-mail:  showard@agsk.com
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                             
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