The pension system has also fired Alliance Capital Management, its money manager of 15 years, which invested the system’s money in 4.9 million Enron shares through its large-cap growth fund between August and November – despite signs of trouble.
Funds previously managed by Alliance have been moved into an internally managed index fund, until the group starts its new defined contribution pension plan in the second quarter of 2002.
Among asset management firms, Alliance Capital had the largest exposure to Enron stock, holding 43 million shares as of September 30, according to Dow Jones.
All told, FRS’s exposure to Enron cost the system $306 million – $281 million through Alliance’s purchase of the shares. Nevertheless, a spokesman for the system maintains that FRS finances are still in good shape, and pay-outs would not be affected.