Daily Archives: September 3, 2004

A separate crime for reckless sex?

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Ian Ayres of Yale Law School and Katherine K. Baker of the Illinois Institute of Technology have posted this rather interesting article on SSRN, which is described in the following abstract:

This article attempts to make progress on both the problems of sexually transmitted disease and acquaintance rape by proposing a new crime of reckless sexual conduct. A defendant would be guilty of reckless sexual conduct if, in a first sexual encounter with another particular person, the defendant had sexual intercourse without using a condom. Consent to unprotected intercourse would be an affirmative defense, to be established by the defendant with a preponderance of the evidence. As an empirical matter, first-encounter unprotected sex greatly increases the epidemiological force of sexually transmitted disease and a substantial proportion of acquaintance rape occurs in unprotected first encounters.
The new law, by increasing condom use and the quality of communication in first sexual encounters, can reduce the spread of sexually transmitted disease and decrease the incidence of acquaintance rape.

Merrill Lynch invests in energy trading business

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This NY Times article reports that Merrill Lynch & Co. jumped back into the energy-trading business with an agreement to buy Entergy-Koch, LP — the Houston-based joint-venture trading unit of Entergy Corp. and closely held Koch Industries — for an undisclosed sum.
Merrill is acquiring a trading staff of about 300 people in Houston and London who primarily buy and sell contracts for electricity, natural gas and weather products. Entergy-Koch valued the business unit at approximately $2 billion.
Merrill’s move back into energy trading highlights the emerging role of Wall Street firms with strong credit ratings in the energy trading industry, which was devastated following the demise of Enron Corp.’s dominant online trading business in late 2001. Merrill joins several Wall Street firms that have recently bought substantial trading operations, including Goldman Sachs Group Inc and Morgan Stanley. Generally, the firms are betting on opportunities that recent volatility in energy prices present, such as big energy users hedging their risk on energy prices. Moreover, the energy books often allow the owners to pick up distressed energy-related assets — such as power plants and pipelines — at bargain prices. Those assets can form the basis of hard assets around which energy traders can sell products.

Enron’s feed trough

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The Wall Street Journal ($) is reporting that Stephen F. Cooper, the independent chief executive officer of Enron Corp. during its chapter 11 case, is preparing to request approval of a $25 million bonus for his and his firm’s (Kroll Zolfo Cooper, a unit of Marsh & McLennan Cos.) work in connection with Enron’s nearly three year old reorganization. The request is in addition to $63.4 million in fees that Mr. Cooper and his firm have already collected from Enron during the chapter 11 case.
Not bad work if you can get it.
Enron’s Chapter 11 disclosure statement estimates that fees to all of the bankruptcy professionals involved in the Enron chapter 11 case will eventually reach nearly $1 billion. Although arguably outrageous, the amount needs to be kept in perspective. Enron’s reorganization plan is a “going concern” liquidation plan that the company believes will generate about $12 billion for distribution to creditors. That translates to a recovery of about 17 cents on the dollar for the largest group of creditors holding unsecured claims. If Enron had simply liquidated immediately after filing bankruptcy, the company estimates that the amount available for distribution to creditors would have likely have been only about $6 billion. So, the reorganization professionals have been at least partly responsible for preserving value for creditors.
But that’s still some serious scratch.