Message-ID: <22151307.1075858603072.JavaMail.evans@thyme> Date: Wed, 26 Sep 2001 08:17:19 -0700 (PDT) From: legal <.taylor@enron.com> To: justin.boyd@enron.com, ian.brungs@enron.com Subject: RE: EOL Cc: tana.jones@enron.com, n..gray@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable Bcc: tana.jones@enron.com, n..gray@enron.com X-From: Taylor, Mark E (Legal) X-To: Boyd, Justin , Brungs, Ian X-cc: Jones, Tana , Gray, Barbara N. X-bcc: X-Folder: \MTAYLO1 (Non-Privileged)\Taylor, Mark E (Legal)\Sent Items X-Origin: Taylor-M X-FileName: MTAYLO1 (Non-Privileged).pst Thanks for your note. Just so you have the whole picture -- our analysis f= rom a US law perspective is that there is a tension between wanting the tra= nsactions on the system to be enforceable and wanting out of the mistake tr= ades. The offline unwind is by far the best approach when the mistake is n= ot blatant since it assumes the binding nature of the original trade. We h= ave been handling these by using a written termination rather than a revers= e trade. This is universally the approach we have taken when our traders h= ave agreed to let a customer out of a trade the customer claims was done by= mistake on their part. This happens often enough that we have given the c= onfirm desk a termination agreement form to use as needed (Tana can get you= a copy if you want it). But when the counterparty refuses to let us out o= f a trade that is a mistake on our part, our only hope is that the mistake = is so blatant that we can claim mutual mistake. Under US law when there is= mutual mistake the contract is actually never formed. In that case, the o= riginal trade is not enforceable and there is nothing to unwind. One alter= native we have used is to simply remove the transaction from the customer's= "completed transactions" section as if it had never happened. As far as I= know, we have only had to do this once or twice. -----Original Message----- From: =09Boyd, Justin =20 Sent:=09Wednesday, September 26, 2001 8:55 AM To:=09Taylor, Mark E (Legal) Subject:=09EOL Mark We do have mistakes from time to time, as you suspected. In almost all cas= es, the respective traders agree to cancel these by entering into a back to= back offline trade. None has been of sufficiemt gravity to be brought to = my attention J