Before any of the 12,000 to 20,000 current and former Enron employees will see any of the money added to their retirement plans though the $85 million settlement must be approved by U.S. District Judge Melinda Harmon, according to a Houston Chronicle report. Even then, the class will most like only see $68 million of the settlement since plaintiffs lawyers are asking that about $17 million be set aside for legal fees.
The settlement is at the level of the expected insurance payout from several insurance policies at Enron. However, attorneys for the plaintiffs say it is a victory to get an agreement that the lump sum be given to victims rather than wait and see some or potentially all of $85 million used for defense lawyers for the outside Enron directors and officers who are part of this settlement.
The settlement though does not spell the end of the lawsuit. Remaining as defendants in the lawsuit are ex-Chairman Ken Lay , ex-CEO Jeff Skilling, former auditor Arthur Andersen, Enron itself in the bankruptcy court, and Northern Trust Co. The plaintiffs complain the defendants breached their fiduciary duty owed to employees under pension laws.
“This will be a small piece of the ultimate recovery,” Lynn Sarko, a Seattle-based lawyer for the employees told the Chronicle.
Additionally, the DoL announced it reached a $1.5 million settlement with outside directors. Of that amount, approximately 20% will go to the U.S. Treasury and the rest will also be put in retirement fund of the employees. The DoL filed its suit in June 2003, alleging that the defendants violated the Employee Retirement Income Security Act (ERISA) when they failed to consider the prudence of Enron stock as an appropriate investment for the retirement plans and did nothing to protect the workers and retirees from extensive losses(See DOL Comes Out Guns Blazing in Enron Suit ).