Footnote 8

Complaint in SEC v. Merrill Lynch, March 17, 2003, at 1. The SEC described the Nigerian Bargetransaction as an “asset parking arrangement” in which Enron purported to “sell” an interest in thebarges to Merrill Lynch; in fact, the “risk of ownership never passed to Merrill Lynch,” and thetransaction was nothing but a “short term loan” with a “specified rate of return.” Id. at 2. TheSEC alleged that Merrill Lynch knew Enron would report $12 million in income from this “sham‘sale.’” Id. About the 1999 electricity trades – for which Enron agreed to pay Merrill Lynch$17 million in fees – the SEC said that Merrill Lynch knew Enron would improperly report$50 million in income from the “sham energy trade.” Id. On the same day the SEC filed suit,Merrill Lynch settled the charges by agreeing to entry of a permanent anti-fraud injunction and bypaying $80 million in disgorgement ($37.5 million), penalties ($37.5 million), and interest($5 million).535. PSI also investigated Merrill Lynch’s involvement in Enron’s collapse. Senator CarlLevin, Chairman of the PSI, concluded that Merrill Lynch “helped Enron artificially and deceptivelycreate revenue.” Statement of Senator Carl Levin, July 30, 2002, at 2. Senator Levin found thatEnron could never have engaged in the deceptions it did without Merrill Lynch’s help. Id. In hiswords, “Merrill Lynch assisted Enron in cooking its books by pretending to purchase an existingEnron asset when it was really engaged in a loan.” Id.536. The Enron Examiner concluded that Merrill Lynch’s business units operated acrossa variety of Merrill Lynch legal entities. After a Merrill Lynch business unit decided to proceedwith a transaction, it would use whichever legal entity was appropriate for that transaction. TheEnron Examiner also found that Merrill Lynch committees that dealt with the various transactionsoperated generally on Merrill Lynch’s behalf. Few Merrill Lynch employees who testified beforethe Enron Examiner were able to specify which of the Merrill Lynch legal entities employed them.604041v1/007457-177-