A third lawsuit against Enron Corp. was filed today by 401(k) plan participants in U.S. District Court in Houston.
The new suit claims Enron executives breached their fiduciary duties toward the 401(k) plan by loading up employees with Enron stock despite allegedly knowing it was an imprudent investment. Enron’s common stock has dropped from its 52-week high of $84.88 to $4.08 today. As of year end, the 401(k) had $2.1 billion in assets.
The suit also contends Enron violated federal securities law by offering and selling the stock without the required prospectus. The suit also claims Enron "locked down” the 401(k) plan between Oct. 17 and Nov. 19 to make administrative changes, which prevented employees from selling Enron shares as the stock price plummeted. In early November, Dynegy Inc., Houston, offered to buy Enron in an all-stock deal for $10.85 per Enron share. The suit seeks to give participants the right to rescind their purchases and receive refunds with interest.
Two other cases filed last week on behalf of Enron 401(k) participants also concern company stock. Those suits cover the period from November 1995 to the present and do not contain the federal securities claim. Because there are similarities, a judge could consolidate the three into a single case, said Eli Gottesdiener, whose firm filed the third suit.