Print this article | Return to Article | Return to CFO.com
Suit alleges that energy company's acts endangered retirement funds.
Stephen Taub, CFO.com | US
November 26, 2001
Two of Enron Corp.'s employees are mad as hell, and they're vowing not to take it anymore. The meltdown in the reeling energy company's share price has led the two workers to sue their employer, claiming Enron's acts endangered their retirement funds.
The lawsuit, filed under the Employee Retirement Income Security Act (ERISA), charges that the energy producer's management encouraged workers to invest more heavily in Enron stock just before the share price of that stock collapsed. The lawsuit was filed by utility lineman Roy Rinard and co-worker Steve Lacey.
The suit alleges that Enron "locked down" 401(k) accounts on October 17, preventing employees from changing the investments they held in their accounts until November 19.
During that period Enron reported its first quarterly loss in four years and took a $1.2 billion charge relating to off-balance-sheet deals that are now being investigated by the Securities and Exchange Commission.
Enron's stock plunged from $30.72 at the close of trading October 16 to $11.69 on November 19.
Enron spokeswoman Karen Denne said that employees' access to their accounts was blocked from October 26 to November 19 due to a previously planned change in the administration of the retirement plan, according to published accounts.
Lacey, 45, who has worked for Portland General Electric for 21 years, told wire services that the freeze on retirement account actions came while bad news about Enron was seemingly being released daily. "We couldn't take our money out of Enron stock into another portfolio. Basically they had us locked down to where we had no say over our own future," he told wire services.
Before Enron's share price took a nosedive, Rinard had $472,000 in his 401(k) plan. He says his plan is currently worth just $40,000.
Enron matches employees' 401(k) contributions with company stock. Many Enron employees, including Rinard, put their entire retirement account into Enron stock when Enron executives predicted that the stock would rise above $100 a share, Rinard told the Houston Chronicle.
The lawsuit is reportedly being patterned after a case brought by employees against Lucent Technologies last summer concerning matching 401(k) contributions with company stock. As with Enron, the share price of Lucent has also dropped dramatically over the past year.