Skip to main content /LAW
CNN.com /LAW
CNN TV
EDITIONS





find law dictionary
 

Enron employees ride stock to bottom

(CNN) -- The collapse of energy trader Enron left thousands of people out of work and also cost many of them their life savings.

A year ago, 62 percent of Enron's 401(k) retirement funds --worth $1.3 billion -- were invested in the company's stock.

Enron had put restrictions on the sale of about 11 percent of the stock, because the shares were given as a match on employee contributions. The rest was purchased by the employees through voluntary salary deductions and could have been sold at any time.

VIDEO
CNN's Brooks Jackson reports on the controversy surrounding Enron's 401(k) program and its stock (January 14)

Play video
(QuickTime, Real or Windows Media)

The Enron scandal has rocked the corporate world. As Greg Clarkin reports, criminal investigations could reach from Wall St. to the White House.

Play video
(QuickTime, Real or Windows Media)
 

Many shareholders chose not to sell, however, and watched as the stock went from a high of more than $80 last January to less than $1 since Enron filed bankruptcy December 2. Trading of Enron stock was suspended Friday at 67 cents.

Enron blocked employees from selling their shares between October 26 and November 8. During that period the stock fell from $15.40 to just over $9 per share.

Charles Presswood, an Enron retiree who had worked for the company for 33 years, said he had invested in the company because he believed in it and that he felt his loyalty had been betrayed.

"If I had not been so loyal to the company and left all of my 401(k) in Enron stock, if I'd diversified, then I would have be in a lot better shape than I am now," Presswood said.

"In other words, I would have still had some money, ... which I don't have now."

Presswood said he had built up more than $1 million in his retirement account before the collapse.

Some Enron employees claim they were defrauded by Enron executives who assured them the stock would rebound, even as they unloaded their own shares in the company.

William Lerach, an attorney for shareholders suing Enron, said 29 top executives and directors of the energy-trading company sold about $1.1 billion in stock during a time when "they have now admitted they were overstating the reported profits of Enron by $600 million and the stockholder equity of the company by $1.1 billion."

"When you have a leader like Mr. [Enron Chairman Kenneth] Lay telling you everything was going to be OK, and judging by his past performance of building up the company to what it was -- which was extremely tremendous -- you believe that, you follow that, and you put a lot of trust in that," said former employee Tim Dalton.

Both Dalton and Presswood told CNN Monday they were aware executives were selling Enron shares, but they did not think anything of it.

"That made me feel real bad when I started to study it," Presswood said. "I thought it was just some stock options that he had to activate on."

"You don't think too much about it, especially when they're telling you everything's fine, the company's great, the company has lots of money, we're making lots of money, life is good," Dalton said.

-- CNN Senior Correspondent Brooks Jackson contributed to this report.



 
 
 
 


RELATED STORIES:
RELATED SITES:
Note: Pages will open in a new browser window
External sites are not endorsed by CNN Interactive.


 Search   

Back to the top