Enron Corp. - University of California | Office of The President

subdivisions thereof and/or State Pension Plans, which have authorized the prosecution of this Claim
and which agree to be plaintiffs in this action (the "Note Subclass").
1016.12 This Claim is brought against defendants JP Morgan and Lehman Brothers
for violations of art. 581-33A(2) of the Texas Securities Act ("TSA") in connection with the sale of
$250 million of 6.95% Notes due 7/15/28 and $250 million of 6.40% Notes due 7/15/06 (the
"Notes") to the Washington Board and the Note Subclass by these defendants.
1016.13 The Registration Statement and Prospectus (the "Selling Documents") contain
untrue statements of material facts and/or omit to state material facts necessary in order to make the
statements made, in the light of the circumstances under which the statements were made, not
misleading. Among other things, the Selling Documents incorporate by reference Enron's Form 10-
K for 97, which was materially false because it concealed debt which had been hidden in the illicit
JEDI/Chewco entity from Enron's balance sheet, as is detailed above. Further, the Registration
Statement incorporates by reference Enron's 97 financial statements, which have now been restated
and are thus admitted to have been false (as is detailed above).
1016.14 The laws of the State of Texas, particularly the provisions of the TSA, are
applicable as there is a substantial nexus between defendants' conduct with respect to the false
Selling Documents and the State of Texas. The false Selling Documents incorporate by reference
Enron's materially false 97 financial statements, which were rendered false by (among other things)
violations of accounting rules that occurred in Enron's Houston offices. Further, the Selling
Documents themselves were prepared in Houston, Texas by Texas lawyers and Texas law firms,
including Enron's General Counsel James V. Derrick, Jr. and other Enron attorneys, as well as
outside counsel Bracewell and Patterson. The Selling Documents incorporate by reference false and
misleading financial statements that were prepared and audited in Houston, Texas. And, the false
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