The Associated Press reports that Judge Melinda Harmon of the S.D. of Tex. has denied the motions to dismiss by Enron and Kenneth Lay in the ERISA class action brought by participants in the company’s retirement plan. In its 329-page order, however, the court did dismiss some of the other defendants (banks and Merrill Lynch).
There have been a wave of class actions alleging that companies and their officers violated their fiduciary duties under ERISA by making false statements that induced employees to invest in company stock at artificially inflated prices. (See this post in The 10b-5 Daily discussing how these suits parallel securities class actions.) The Enron suit is complicated by allegations that Enron executives sold off company stock while workers were locked out of their 401(k) accounts and the company’s stock price plummeted.