Tags: Enron | Employee | Suit | Identifies | Big | Winners

Enron Employee Suit Identifies Big Winners

Wednesday, 13 February 2002 12:00 AM

Filed late last month in the U.S. District Court for the Southern District of Texas, the complaint names as defendants Northern Trust Co., which managed the Enron retirement plan, the Arthur Andersen accounting firm, as well as scores of Enron executives. It recites the amounts each was "believed to have received from the sale of his or her Enron stock” - while the rank-and-file employees’ 401(k) portfolios were frozen.

Heading the defendant list was Kenneth Lay, formerly chairman of the board of directors and CEO of Enron, with a $101 million payout. Other Enron executive defendants and their respective payouts included:

The suit relies on theories of defendant violations of the Employee Retirement Income Security Act (ERISA) and breach of fiduciary obligations to the holders of the retirement plan. It keys in on Oct. 16, 2001, the date Enron announced that the company was taking a $1.01 billion after-tax hit ("non-recurring charges”) in the third quarter of 2001.

"[F]ollowing this announcement,” said the complaint, "the individual and Northern Trust Defendants proceeded to transfer the trustee and record keeper of the [retirement] Plan from Northern Trust to Hewitt Associates Inc., triggering an administrative lockdown period when no Plan participant could sell any investment in his or her account… During the lockdown period, some or all of individual defendants sold their company stock.”

According to the complaint, the defendants failed to advise the employees that their investment in the retirement plan was at substantial risk because company stock constituted a large percentage of the plan’s total assets.

"Unbeknownst to Plaintiffs but known to Defendants, Enron’s participation in hopelessly complicated partnerships and finance projects prevented Defendants from conveying accurate and complete information about the company and its financial situation,” alleged the pleading.

According to the complaint, some of that accurate and complete information that failed to reach the employees included when Enron:

The plaintiffs are asking the court for an order compelling the defendants to make good the losses to the retirement plan and to restore to the plan any profits made through breaches of fiduciary duties or duties under ERISA.

Furthermore, the plaintiffs are seeking to have the court remove the Enron defendants from a position of trust with respect to the retirement plan.

Attorneys for the plaintiffs in the class-action suit will be asking Enron executives many of the same questions posed by Congress in depositions and interrogatories.

With 11 Hill committees vying to investigate Enron, there has been the suggestion that the effort be streamlined and consolidated into one joint House-Senate investigative body. According to Hill authorities, however, such a consolidation is not immediately in the works.

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Filed late last month in the U.S. District Court for the Southern District of Texas, the complaint names as defendants Northern Trust Co., which managed the Enron retirement plan, the Arthur Andersen accounting firm, as well as scores of Enron executives. It recites the...
Enron,Employee,Suit,Identifies,Big,Winners
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2002-00-13
Wednesday, 13 February 2002 12:00 AM
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