Boxer: Lockdown of Enron Retirement Funds Illegal
HOUSTON – A lawmaker who authored the law designed to protect workers from being forced to invest heavily in their employers' stock says Enron Corp. illegally blocked employees from selling their shares in the Houston energy trader and making other retirement plan changes.
When Enron prohibited its employees for several weeks from selling stock held in retirement plans, it "forced" workers to keep their voluntary contributions and earnings on those contributions invested in Enron's plunging stock, said U.S. Sen. Barbara Boxer.
The California Democrat authored a 1997 amendment to the Employee Retirement Income Security Act to protect employees' ability to choose investments.
The measure prohibits companies with direct control over their employees' 401(k) or other defined contribution plans from investing more than 10 percent of the employees' assets in company stock or holdings, such as real estate, Boxer's staff said.
Enron's stock, which once traded for $80 or more per share, has tumbled to less than a dollar on the New York Stock Exchange as the company filed one of the biggest Chapter 11 reorganizations ever in federal bankruptcy court.
The company closed access to employee 401(k) accounts from Oct. 16 to Nov. 13 while it changed plan administrators.
"It was a move that had been in the works for more than six months," Enron spokeswoman Karen Denne told the Houston Chronicle in Wednesday's editions.
But the same day workers were shut out of their retirement accounts, Enron announced a $1.01 billion charge on its third-quarter earnings to untangle itself from losing investment partnerships that had been used to keep debts and other liabilities off the company's main books. The stock plummeted with the news.
The Enron Corp. Savings Plan's annual report, filed with Securities and Exchange Commission in June, showed that 54 percent of the total assets in Enron's 401(k) plan was invested in the company's common stock.
Boxer has asked Labor Secretary Elaine Chao and IRS Commissioner Charles Rossotti to review the law and, if they find Enron was in violation, to remove tax benefits the company accrued during that time. Enron would owe the federal government back taxes if that happened.
Mark Palmer, an Enron spokesman, said 12,200 employees participated in the 401(k) plan.