Enron
Special Purpose Entities (SPE) are legal. Enron violated both the 3% equity and transfer of risk requirements. Is Enron's use of the SPE not only illegal, but also unethical? In what respects? What makes the SPE ethical in certain circumstances, and not others? Is there ever a case where you would consider and SPE ethical? What, is anything, differentiate that circumstances from those in the case?
After the Enron collapse, the word SPE has acquired an unpleasant connotation in public mind. A SPE, as the name suggests, is formed for a special purpose: therefore its powers are limited to what might be required to attain that purpose and its life is destined to end when the purpose is attained.
When a corporation, call it the sponsor of the SPV, wants to achieve a particular purpose, for example, funding, by isolating an activity, asset or operation from the rest of the sponsor's business, it hives off such asset, activity or operation into the vehicle by forming it as a special......
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