Footnote 8

disclosed, “Enron could not have accounted for the transaction as it did”; and that CIBC“participated in FAS 140 transactions that CIBC knew were designed to manipulate [Enron’s]financial statements.” Exam. III, App. H at 2-3.(1) CIBC’s relationship with Enron.509. Defendant CIBC is a full-service financial institution that operates primarily inCanada, Europe, and the United States. Throughout the relevant period, CIBC maintained an officein Houston, Texas. CIBC personnel in this office were involved in discussing and implementingthe transactions with Enron discussed below, including preparing the internal credit applicationsnecessary for the approval of each transaction at CIBC. In at least once instance CIBC personnelin Houston specified how the debt and “equity” portions of one transaction were to be allocatedbetween separate CIBC legal entities in order to maintain the appearance of proper accounting.Exam. III, App. H at 11 n.25. In addition, CIBC officers in other cities regularly traveled to Houstonto meet with the Insiders to discuss, among other things, Enron’s assurances of repayment of CIBC’s“equity” investment in FAS 140 transactions, increasing the flow of deals to CIBC as a result ofCIBC’s demonstrated willingness to assist the Insiders in manipulating and misstating Enron’sfinancial condition, and an investment by CIBC in LJM2. In the early 1990s, CIBC’s involvementwith Enron was relatively limited. In 1998, the nature of the relationship changed as the number oftransactions between CIBC and Enron increased dramatically. From 1998 to Enron’s bankruptcy,CIBC completed an average of two Enron FAS 140 transactions per quarter – more than three dozenin all, including the various asset transfers in the Hawaii “warehouse” vehicle. As a result, CIBCwas elevated to the status of Tier 1 bank. From 1997 to bankruptcy, CIBC earned approximately$30 million in fees. More than $14 million of the fees were attributable solely to the FAS 140transactions.604041v1/007457-165-