Five years on from the Enron collapse the company is coming back into the news with the trial of Ken Lay and Jeff Skilling the two former chief execs. They claim that they willl not get a fair trial in Houston, and despite attempts to have the trial moved, it will go ahead in Houston at the end of the month. It is often easy to overlook what a massive fraud Enron was, but this was the bankruptcy of the seventh largest company in US history and it was caused by gross mis-management. Every trader is taught that there are rules in which to trade, these rules are effectively a moral code, which allows a trader to take risk and profit from it. If however, the risks are not truly defined and the bad trades are not reported then this is where the system breaks down. In Enrons case the whole company had a perfected ways of mis-reporting risk positions. In fact the accountancy section was rewarded for being able to hide transactions which were bad for reporting. The accountancy function was bonused for providing balance sheet revenue.

As markets in Europe lose some of their liquidity it is clear that the trading for tradings sake, often seen in the Enron days has gone. The big vertically integrated players now only trade residuals or small volumes to mark their curves. No one suggested that the Enron days of deep liquidity were perfect but the reverse back to the old style bi lateral contracts is doing no good for the market either.