X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Former Enron employees who lost millions of dollars in retirement money in the company’s stunning collapse would get at least $66.5 million from two newly reached settlements of lawsuits, Labor Secretary Elaine Chao said. The employees had alleged in a class action suit that they lost more than $1 billion because the now-bankrupt energy company and its officers failed to execute their duties in administering Enron’s pension plan. The partial settlement calls for the company employees who were trustees of the plan to hand over an $85 million insurance policy that covered them against liability. It resolves the claims against Enron’s human resources staff and company directors, but not those against the company itself and Kenneth Lay, who had been Enron’s chairman, and former chief executive Jeffrey Skilling. Attorneys for the Enron employees said their deal would be the largest settlement ever of a case involving company stock in retirement plans. “This is an excellent result,” said Clyde Platt, an attorney with Hagens Berman in Seattle. Separately, former company directors have agreed to pay a total of $1.5 million to resolve a civil suit by the Labor Department. The department’s suit, filed last June, also named Lay and Skilling. The government sought to recover hundreds of millions of dollars in lost employees’ retirement money, alleging that Enron and its top executives mismanaged retirement plans full of overpriced company stock. The Labor Department set as a condition for its participation in the deal that a minimum of $66.5 million be returned to the depleted Enron 401(k) and employee stock ownership plans. Some of the remainder of the $86.2 million total of both settlements would go to pay the private attorneys’ fees, subject to court approval. Also, up to $300,000 of the directors’ $1.5 million settlement with the Labor Department would be paid as a penalty. In addition, the directors — including Wendy Gramm, former head of the Commodity Futures Trading Commission and wife of ex-Sen. Phil Gramm, R-Texas — would be barred for five years from acting as trustees of any federally regulated pension plans without the Labor Department’s permission. The directors did not admit wrongdoing under the settlement. Both suits were filed in federal court in Houston, where Enron had its headquarters, and the settlements must be approved by the court. “If approved by the court, these settlements guarantee a significant recovery for the Enron workers, retirees and their families,” Chao said Wednesday in a statement. “We will continue to pursue additional recoveries and all available remedies to hold Enron and its executives accountable. Corporate malfeasance will not be tolerated.” More than 20,700 participants in Enron’s 401(k) plan had nearly two-thirds of their assets invested in company stock. The company spiraled toward bankruptcy in late 2001 and the stock collapsed, from a high of nearly $85 in December 2000 to less than $1 in November 2001. Employees were not told about the deteriorating finances and were blocked for a time from selling the declining Enron stock in their retirement accounts. The Labor Department declined to discuss the pending claims against Lay and Skilling, other than to say the case continues. Lawyers for the former Enron employees also indicated their lawsuit will proceed. Skilling attorney Daniel Petrocelli declined comment Wednesday. An attorney for Lay didn’t return a telephone call seeking comment. Federal prosecutors in February charged Skilling with nearly three dozen counts of fraud and other crimes stemming from Enron’s collapse. He has pleaded innocent and is free on bond. Lay, who has disputed the government’s allegations, is not facing any criminal charges. Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.