The bankruptcy filing by the former energy giant Enron Corp. is causing serious repercussions for investors nationwide.
Wisconsin Attorney General James Doyle and the State of Wisconsin Investment Board, an organization responsible for the pensions and retirement plans of state employees, are taking action to compensate for the state investors’ losses.
Doyle supports a widespread motion amongst many states that involves seeking a temporary restraining order against Enron and an injunction freezing the company’s assets.
“Enron acted in bad faith. I have a great amount of respect for what Doyle is doing because it is his duty and his job. I can’t imagine anyone would oppose this action,” said Jay Heck, executive director of Common Cause in Wisconsin.
Doyle said he thought Wisconsin should generate significant public support for these measures because of the damages state residents have incurred.
“The state of Wisconsin and its retirees have suffered a significant loss as a result of the Enron collapse, as have investors throughout the U.S.,” Doyle said in a statement. “This action seeks to freeze the officers’ assets to make sure they do not liquidate the assets while attempting to recover damages are pending. Our action helps ensure that assets will be available for Wisconsin to receive some compensation for its losses.”
SWIB has more than 475,000 current or former employees of state agencies, school districts and local governments participating in its retirement system.
“Forty-five million is a significant loss. The results of this collapse have an effect on everyone,” said Randy Romanski, a Doyle spokesman. “Our goal is to go out and recover by asking the court to require the company to freeze the assets and disgorge and potential ill-gotten gains through the investigation of inside trading, shredding of documents and any other mismanagement that occured.”
Court dates are not set for the suits challenge; Wisconsin investors must first decide the scope of class action litigation to be pursued.
“There will be a lot of people in line, being employees and investors that have been affected in many ways,” Romanski said. “James Doyle and SWIB are doing everything possible for state involvement.”
SWIB, netting an estimated loss of $9 million on the stock and $36 million on the bonds invested in Enron, is proposing a seven-step plan to the Securities and Exchange Commission to prevent such an instance in the future.
“We are asking for reforms that will make a positive impact on the industry. Some of the reforms we’ve been supporting for years are auditor independence, reinstitution of the proxy-voting system and prohibiting auditors from providing clients with non-audit services,” said SWIB public relations executive Vicki Hearing.
“With a case as large and complicated as Enron’s, it’s hard to speculate on what will come of the litigation process. Our goal is to recoup as much as possible for our investors,” she said.
SWIB has participated in approximately 100 class action lawsuits over the last five years, recovering over $35 million in claims.
