I wanted to give you an update as to the status of the NSM Cases:

1)  Farallon:  There is a signed settlement agreement in place.  (I have the
plaintiffs' signature pages and am gathering the other defendants' and will
forward you a fully-executed copy when I've got it.)  However, the case has
not been dismissed yet because of two small issues, neither of which involves
Enron/ECT Securities directly.  First, plaintiffs had wanted two signatures from each defendant on the
Settlement Agreement.  (The California corporations code provides that a
corporation cannot claim lack of authority by signers of a document if both
the president or a vice president and the secretary, CFO or treasurer sign.) I've convinced them to accept one signature from ECT Securities because it is
a limited partnership, so the code provision does not apply.  However, the
plaintiffs are insisting that Natwest, several of whose entities are
corporations, provide two signatures instead of only one.  I suspect the issue
will be worked out this week - there is a hearing scheduled for Friday (7/20)
at which the case is expected to be dismissed.

Second, several of the defendants (but not ECT Securities) have cross-claims
against John Schultes that were not released in the settlement with
plaintiffs.  In negotiating to settle those claims, Schultes indicated that he
wanted to be released from liability by all defendants, including ECT
Securities.  However, we have made clear to the other parties that ECT
Securities (and its affiliates) will not release any claims it may have
against Schultes (e.g., for indemnification and/or contribution with respect
to our settlement amount and attorneys fees) without being released from all
liability to Schultes relating to NSM - including the action he filed in Ohio
state court, in which he sued Enron.  The other defendants may settle with
Schultes and simply leave ECT out of it, in which case the entire Farallon
case could be dismissed, leaving Enron/ECT to deal with Schultes on our own. (ECT has the right to bring any indemnification or contribution claims in a
separate action, so dismissal of the case would not affect its rights.)  I'll
keep you updated on this - we should know more by the hearing on Friday
morning.

2)  Legg Mason.  We have a fully-executed settlement agreement.  (I'll send
you a copy later today.)  Plaintiffs expect to dismiss the case later this
week - perhaps at the hearing on Friday in Farallon.  I'll keep you updated.

3)  Agreement among defendants.  All defendants have signed the agreement and
releases.  I will have all signature pages today and send you a copy.

If you have any questions, please feel free to call me at (310) 551-9180 or
return this e-mail.

Thanks.

    - Jonathan -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         ................................................

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