Enron Rapidly Unraveling

Enron Corp., one of the leading commodity trading companies in the world, is rapidly falling apart, with the lifesaving acquisition by Dynegy, a smaller rival, appearing to be halted due to the lack of creditworthiness of the one time high-flier.

The company, over the past year, has grown its online commodity trading business in a host of categories, including both paper and metals. However, a recent spate of questionable accounting moves has created significant erosion of investor confidence, resulting in a plummeting stock price and its company debt downgraded to “junk” status.

There are a host of reports that many traders outside North America have ceased using EnronOnline for metals trading.

In an article by Dow Jones, a majority the cutbacks have been in futures trading, where some companies have closed their accounts. These decisions followed concerns about Enron’s financial status. At the same time, many of these same companies are switching to other trading companies.

The article does mention that physical trading of commodities in Asia are less affected due to the company’s strong contacts with Asian companies.

Adding to the overall woe for Enron have been reports that EnronOnline’s trading system was halted Wednesday, Nov. 28.

It was not clear whether the EnronOnline trading system was halted deliberately or by a technical problem. Enron officials were not immediately available for comment.

EnronOnline until recently, accounted for about 60 percent of the daily trade volume handled by Enron.