The U.S. Department of Labor today announced a proposed $12 million settlement with the estate of Enron Corp. founder Kenneth Lay on behalf of participants in Enron's pension plans, according to a news release.
The Labor Department sued Mr. Lay for allegedly mismanaging the plans in violation of the Employee Retirement Income Security Act. The suit alleged that Mr. Lay, who died of an apparent heart attack on July 5, failed to properly oversee the fiduciaries he appointed to run the plans, misrepresented the company's financial condition to employees and encouraged them to buy Enron stock when he knew it was imprudent.
According to the release, the proposed settlement still must be approved by the U.S. District Court for the Southern District of Texas. Final recovery also will depend on the total assets remaining in Mr. Lay's estate.
The agreement doesn't settle claims against former Enron CEO Jeffrey K. Skilling, who was convicted of fraud, conspiracy and insider-trading charges related to Enron's collapse, the release stated.
In previous settlements, the Labor Department and private plaintiffs have recovered more than $220.8 million for pension plan participants from Enron and its directors, officers and fiduciaries, but final amounts are subject to the resolution of appeals, according to the release.