In California, six of the state’s largest public pension funds reported losing a combined $250 million because it held now nearly worthless Enron stock.
In Illinois, Senator Richard Durban (D-Illinois) is urging Illinois Attorney General Jim Ryan to take more aggressive legal action against Enron on behalf of the state’s five government retirement systems.
According to Crain’s Chicago Business, Durbin says those programs have lost nearly $40 million from bad investments in the failed energy company. Durbin has joined with Illinois State Comptroller Daniel Hynes in asking Ryan to seek ‘all available legal remedies,’ according to the report, which notes that last week Ryan joined a civil class action against Enron.
Losses incurred by the state’s retirement systems include:
- $14 million by the Teacher’s Retirement System
- $18 million by the State Retirement Systems of Illinois, which covers state employees, judges and lawmakers
- $8 million by the State Universities Retirement System, which covers university employees
Meanwhile, sentiments are running along the same lines in the Sunshine State, where Florida Governor Jeb Bush went on record supporting the filing of a lawsuit against Alliance Capital Management, whose investment decisions cost the state’s pension fund over $300 million.
All told, the Florida fund’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 the fund’s finances are still in good shape, and pay-outs would not be affected. Alliance continued to buy Enron shares even after the firm came under scrutiny by the Securities Exchange Commission (SEC).
Enron and auditor Arthur Andersen are already being sued in a Texas federal court by the Florida fund. Bush, along with State Treasurer Tom Gallagher and State Comptroller Bob Milligan, sits on the FSBA’s three-person Governing Board.
In a Cabinet meeting yesterday, Bush asked Tom Herndon, the board’s director, why Alliance hadn’t been sued. According to Dow Jones, Herndon said lawyers were working toward that, saying it was likely “the correct thing to do.”
Among asset management firms, Alliance Capital had the largest exposure to Enron stock, holding 43 million shares as of September 30.
Florida Attorney General Bob Butterworth is already targeting Alliance, having issued racketeering subpoenas to the company, along with Enron.
Florida House Speaker Tom Feeney also announced the formation of a special House investigative committee to review the pension fund’s Enron purchases.