LJM, which stands for Lea, Jeffrey, Michael, the names of Andrew Fastow's wife and children, was obviously a company produced in 1998 simply by Enron's CFO, Andrew Fastow, to buy Enron's poorly doing stocks and stakes and bolster Enron's financial claims. Fastow proposed in March 1999 to Enron's finance Board the creation of LJM2 Co-Investment L. G. Fastow would act as basic director of any much larger private equity finance fund that could be funded with $200 , 000, 000 of institutional funds. Problem of Fastow's dual position as Enron's CFO and LJM2's basic director was not viewed as a conflict of interest was easily laid aside. LJM2, which is a collaboration created to purchase assets owned by the Enron Corporation to help move debt off of the balance sheet and transfer risk for their very own other businesses. These Special Purpose Organizations (SPEs) was established to keep Enron's credit rating stay high, which was very important inside their fields of business. A unique purpose enterprise is a trust, corporation, limited partnership, or perhaps other legal vehicle official to carry out specific activities since enumerated in its establishing legal document. LJM2 entered into twenty six deals with Enron to help the corporation move debts and resources off it is books. The SPEs provides its bring in with funding and liquidity while offering creditors protection against the sponsor's personal bankruptcy. Anyway, the executives believed that if perhaps Enron's long-term stock beliefs could continue to be high, they would have ways to use the company's stock to hedge the investments in these other entities. They did this through a very sophisticated arrangement of SPEs they will called the Raptors, several entities created to both barrier Enron's revenue from mark-to-market write-downs and to pay millions of dollars to a number of Enron business owners and their friends The Raptors were proven to cover their losses in case the stocks inside their start-up businesses fell. It was very clever, but wrong. In order for the Raptor to come through, the telecom...
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