There is already a securities class action and an ERISA class action seeking damages on behalf of Enron’s employees who invested in Enron stock through the company’s pension plan. Now the Department of Labor is joining the bandwagon. The Houston Chronicle reports that the DOL has brought its own ERISA claim on behalf of the employees for violations of the pension laws. The suit “accuses former Chairman Ken Lay, former CEO Jeff Skilling, the former board of directors and officers on a committee overseeing Enron’s retirement plans with failing to fulfill their responsibilities.”
Just as in the securities and ERISA suits, however, the DOL’s suit appears to focus on alleged false statements that induced employees to invest in the stock at artificially high prices. But isn’t this circumventing the PSLRA? (See this post for a discussion of the conflict.) And aren’t the public and private ERISA suits going after the exact same sources of recovery? (See this post about a similar overlap problem between the SEC and securities class actions.)
Quote of note (Houston Chronicle): “‘Mr. Lay went so far as to tout Enron stock as a good investment for employees even after he had information on the accounting scandals,’ said Elaine Chao, U.S. Secretary of Labor.”
Quote of note (Reuters): “Radzely [Labor Solicitor] later told Reuters that the department would seek to recover money where it could, including from each individual defendant and from an $85 million fiduciary liability insurance policy that covers some of them. But the court will determine the extent of each defendant’s liability, he said. ‘We’re going to go wherever the money is,’ he added.”
Benefitsblog has collected links to related articles.