Enron Employees Form Coalition, Wage New Suit

January 28, 2002 (PLANSPONSOR.com) - A group of former Enron employees have banded together to form the Severed Enron Employees Coalition (SEEC). The coalition has filed a class action suit against a number of Enron executives asking a jury to "make good" on the losses suffered by employees who contributed to Enron's 401(k) plan.

The SEEC claims in its suit that Enron executives strongly encouraged Enron employees to invest in Enron stock while failing to notify them of the company’s financial situation.

Additionally, the suit claims that the defendants placed restrictions on the employees’ ability to sell the stock in their 401(k) plans, resulting in millions of dollars in losses when financial irregularities at Enron came to light.

The defendants named in the suit include:

  • Former CEO Kenneth Lay whom the group believes has received $101 million from the sale of Enron stock
  • Former CEO Jeffrey K. Skilling who is believed to have received $67 million from the sale of Enron stock
  • Former CFO Andrew Fastow who is believed to have received $30.4 million from the sale of Enron stock
  • Northern Trust Company, the retirement plan’s trustee
  • Arthur Andersen, Enron’s accounting and consulting firm as well as independent auditor.

Besides the suit filed in Houston, lawyers for SEEC are working to secure a place for an official committee of severed Enron employees in the bankruptcy proceedings taking place in New York.  Currently, there is one employee representative assigned to a committee of general, unsecured creditors.

This suit is similar to one of the earlier suits filed on behalf of Enron employees by the Gottesdiener Law Firm. However, Gottesdiener’s suit seeks retribution for Enron employees who were participants in its 401(k) plan going back to 1995. Gottesdiener is seeking class-action status for his suit.