State Pension Systems May Join in Suits against Enron

By Boyd, Danny M. | THE JOURNAL RECORD, December 4, 2001 | Go to article overview

State Pension Systems May Join in Suits against Enron


Boyd, Danny M., THE JOURNAL RECORD


Oklahoma pension systems will likely join anticipated class- action lawsuits to recoup millions of dollars in investment losses arising from Enron's financial plunge, retirement system managers said Monday.

On Sunday, Enron filed for Chapter 11 bankruptcy protection from creditors. The move could cost Oklahoma institutional investors and companies almost $150 million, according to early estimates from several pension managers and energy companies.

Investors dumped millions of Enron shares beginning in October after revelations that the Houston-based energy trader inflated its earnings. Enron's stock nose-dived from a 12-month high of $84.87 last December to less than $1 currently.

The Oklahoma Teachers Retirement System counts up to $1.6 million in losses from 74,400 shares in Enron through an S&P 500 index fund, Executive Director Tom Beavers said.

"There's going to be class-action lawsuits and we're going to participate in those," Beavers said.

The potential loss is well under 1 percent of the system's $5.8 billion portfolio and should not affect overall retirement benefits, he said. But the system hopes to recoup what it can.

The Oklahoma Public Employees Retirement System expects its custodial bank, Northern Trust in Chicago, to participate in any legal action on behalf of the system, Executive Director Steve Edmonds said.

"Our custodial bank automatically files for us to take part in any class-action lawsuit involving our securities, unless we specifically tell them otherwise," he said.

OPERS could lose roughly $2 million in Enron. Its entire investment portfolio is worth $4.7 billion. Benefits for 21,000 retirees and beneficiaries will not be affected, Edmonds said.

California's Public Employees' Retirement System, the largest public pension fund in the country, holds roughly 2.8 million Enron shares worth $197 million a year ago. Their value now is about $1.2 million.

Enron's is one of the largest U.S. corporate bankruptcies ever. It comes after revelations in October that its former chief financial officer was running partnerships that allowed the company to keep half a billion dollars in debt off its books.

In early November, Enron restated its earnings since 1997, eliminating more than $580 million in reported income and spurring investor flight.

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