Florida's Enron Inquiry Picks Up Steam

January 18, 2002 (PLANSPONSOR.com) - Florida pension plan officials are proceeding on several fronts as their battle to recover losses from energy giant Enron continues to heat up.

In court, pension plan officials in Florida and New York City have positioned themselves to be leading the charge when the array of Enron lawsuits gets underway. 

Attorneys representing the Florida State Board of Administration and the New York City Pension Funds were in Houston earlier this week to file their request in US District Court for the Southern District of Texas to become co-lead plaintiffs, according to a Wall Street Journal report.

The New York City and Florida pension funds have combined Enron losses of about $410 million.  While pension benefits of neither fund are threatened by the loss, the Florida fund in particular has been aggressive in pursuing its rights as a shareholder.

Alliance Buys Trouble?

In other Enron news from Florida, officials are looking into whether an investment company that handled part of the state’s $94-billion pension fund committed any wrongdoing.

The probe centers on Alliance Capital Management Corp., which bought Enron shares heavily even after finding out the company was in trouble, according to the Associated Press.

State officials said the Florida fund lost more than $300 million after they had to dump 7.5 million Enron shares after Enron filed for federal bankruptcy protection on December 2.

The state Board of Administration fired New York-based Alliance last month. Board members said they were unhappy Alliance continued buying Enron shares as long as it did.

The Miami Herald reported that Alliance’s executive Frank Savage was also an Enron board member and a major contributor to political campaigns.

Alliance vice chairman Alfred Harrison said in a December 5 letter to the Board that his company bought Enron shares because Enron was the dominant player in the wholesale gas and electricity trading market.

Decision By Month-End?

Meanwhile, when it comes to seeking the top plaintiff spot in the Enron court cases, the Florida and New York officials have lots of company; Fifteen other plaintiffs are also jockeying for the same position.

There are nearly 40 plaintiffs suing Enron, the company’s current and former executives and directors over losses they suffered in Enron’s collapse.

US District Court Judge Melinda Harmon’s ruling on the lead plaintiff issue could come as early as the end of the month when she has scheduled the last round of legal pleadings to be filed.