Enron employees ride stock to bottom [They could have sold ENE stock]

CNN ^ | 1-14-02 | Brooks Jackson

[Oldeconomybuyer]

A year ago, 62 percent of Enron's 401(k) retirement funds --worth $1.3 billion -- were invested in the company's stock.

Enron had put restrictions on the sale of about 11 percent of the stock, because the shares were given as a match on employee contributions. The rest was purchased by the employees through voluntary salary deductions and could have been sold at any time.

[Oldeconomybuyer]

I saw this Brooks Jackson report last night on CNN and he noted a total shareholder loss on ENE of $70b while other companies like CSCO have lost over $300b in shareholder value over the past 12 months.

[PogySailor]

Enron blocked employees from selling their shares between October 26 and November 8. During that period the stock fell from $15.40 to just over $9 per share.

What? LOL! 

I can't believe that CNN let THAT nugget slip past the censors!  Hasn't the "party" line been that Enron prevented employee's from selling their shares, period?

[Chad Fairbanks]

Well, now that major 'Rats are beginning to appear in the cross-hairs, we can expect a major downplaying of the Enron story - doesn't do any good to try to take down Bush, if all they do is sink themselves instead...

[Oldeconomybuyer]

Exactly. Keep this in mind as the employee/shareholders appear before congress and cry about losing their retirement funds. According to CNN they could have sole at almost any time up to the actual bankruptcy filing.

Almost anyone with a 401K lost a bundle over the past 24 months but the ENE employees are getting political traction with the help of the media. If they get bailed out on their ENE loss, I want a bail out on my CSCO, T, INTEL, BRCM, and LU.

[OldFriend]

In other words, now that the scandal is going to land on the democrats and Rubin, it is all the employee's fault!!! LOLOL don't you just love it!!!!

It is absolutely true tho that those who lost money lost only that portion of their 401Ks that were in Enron stock.

[mountaineer]

Yes, that has been the party line, that those poor working class (pay no attention to their actual salaries) souls lost everything because they had no choice. Excuse my lack of tears, but anyone who puts all his retirement eggs in one basket, i.e., in stock from a single company - no matter which company - is a fool. Had none of these Enron employees heard of the concept of diversification?

[lavrenti]

Oh dear, looks like we have blowback!

[Chad Fairbanks]

Democrats: "Ouch! Something just bit me in the butt!"

[Huck]

I think they are making the argument that if the stock fell as a result of illegal practices, then they should be compensated. I wonder if that premise has been tested in court before.

[centurion316]

I haven't seen this show up in other media yet, but I expect it will. I think that this will take the winds out of the sails of this argument. Good post.

[RedWhiteBlue]

I saw the Brooks Jackson report last night also, and was very surprised. My take is that CNN knows this will bite the Dim's rears far more than the Bush administration, so they are backing off of the political angle.

On the other hand, I would love to know how Ken Lay and the other top executives were managing their own 401K's during this period while they were furiously selling off their private Enron stock and stock options. (Insider Trades can be seen HERE). I bet they were "diversified" within their 401K.

[mountaineer]

"A fool and his money are soon parted. I would pay anyone a lot of money to explain that to me."
-- Homer Simpson

[ValerieUSA]

If all the Enron employees put their stock on the market as soon as they heard there was trouble, who would have bought it? Other "victims"?

[Dog Gone]

I think they are making the argument that if the stock fell as a result of illegal practices, then they should be compensated. I wonder if that premise has been tested in court before.

The problem with that argument is that the stock was high in the first place because of those very same illegal practices.

[RGSpincich]

And the people who might have bought the stock from the employees would have lost real dollars. The Enron employees, for the most part, were GIVEN the stock as a part of the so called profit sharing plan.

[Oldeconomybuyer]

Good point about fraud but that remains to be seen. The point of this article is that virtually ALL PRESS ACCOUNTS state that the employees were prohibited from selling their ENE shares while executives cashed out. Based on this report, virtually 100% of the press reports are FALSE.

[Huck]

I agree with you that the hype has been misleading.

[bray]

Notes to self:

1) Never put my retirement in high risk energy commodity companies.

2) When they crash, take it like a man!

Pray for GW and the Truth

[PogySailor]

I read a good review of the actual timeline on another thread. The ONLY time employee's couldn't sell the shares was during the transition period between 401k management firms. That's normal procedure. I just with through one myself. And this was late in the year after the bulk of the losses had happened. 

The sad fact is that too many people rode Enron all the way down, hoping for a turn around. I can relate somewhat because I've got Cisco stock that is worth about 25% what I paid for it.

[OldFriend]

I have been pondering this Enron situation and also thinking about many many Americans who stood by and watched their own portfolios drop down down down and did nothing. Thinking back on my own personal folly I realized that one thing stopped me from selling way back when........the CAPITAL GAINS TAX........of course, in hind sight I would have been better off paying the damned taxes than suffering the (paper) losses.

But that is hindsight and IMHO, one thing that will help prevent future disasters like this is to get rid of the Capital Gains Tax so people are not so reluctant to sell and hand over so much of their investment profit to the government.