Employers on both sides of border watching as U.S. Government reviews pension rules in the wake of the company's collapse
The collapse of Enron Corporation in the U.S. has left employee pension funds hurting and has prompted a review of pension plan investing in addition to the high-profile criminal investigation involving White House staff.
And now there are allegations that the company's CEO touted its stock as an incredible bargain, in a Web chat with employees, just weeks before filing for bankruptcy.
Last December, the energy firm filed the largest bankruptcy in U.S. history.
About 11,000 Enron employees lost about $1 billion (U.S.) in less than two months when the company’s shares became practically worthless. Many employees saw their nest eggs collapse.
The U.S. Department of Labor is investigating whether Enron violated any laws when it froze assets in the 401(k) plan (the U.S. equivalent of an R.S.P.) as its stock sank.
Three employees have filed a law suit, claiming that Enron failed to warn them about the stock’s riskiness - and the company's serious financial troubles - and even encouraged them to invest more in the firm.
According to U.S. pension law, 401(k) plan sponsors have a fiduciary duty to provide prudent and diversified investing options. The government will be investigating to decide whether the rules about disclosure of financial troubles need to be strengthened.
A lawyer representing some Enron employees in another case says the company had a conflict of interest and should not have invested in Enron stock.
Plan sponsors in Canada will be closely watching the on-going investigations because there may be ramifications on both sides of the border.
If the U.S. government finds that pension regulations have been violated, they may make changes to the pension laws, and the ripple effect of that could be changes to Canada's regulations as well.
And now there are allegations that the company's CEO touted its stock as an incredible bargain, in a Web chat with employees, just weeks before filing for bankruptcy.
Last December, the energy firm filed the largest bankruptcy in U.S. history.
About 11,000 Enron employees lost about $1 billion (U.S.) in less than two months when the company’s shares became practically worthless. Many employees saw their nest eggs collapse.
The U.S. Department of Labor is investigating whether Enron violated any laws when it froze assets in the 401(k) plan (the U.S. equivalent of an R.S.P.) as its stock sank.
Three employees have filed a law suit, claiming that Enron failed to warn them about the stock’s riskiness - and the company's serious financial troubles - and even encouraged them to invest more in the firm.
According to U.S. pension law, 401(k) plan sponsors have a fiduciary duty to provide prudent and diversified investing options. The government will be investigating to decide whether the rules about disclosure of financial troubles need to be strengthened.
A lawyer representing some Enron employees in another case says the company had a conflict of interest and should not have invested in Enron stock.
Plan sponsors in Canada will be closely watching the on-going investigations because there may be ramifications on both sides of the border.
If the U.S. government finds that pension regulations have been violated, they may make changes to the pension laws, and the ripple effect of that could be changes to Canada's regulations as well.
