Named plaintiff Roy Rinard, a long-time employee, had more than $470,000 of his retirement savings invested in Enron stock on the advice of Enron plan administrators. Now his retirement fund is worth just $70,000 -- a loss of $400,000 in a little more than a month. "I feel like I have been betrayed," said Rinard. "I have lost my savings, my plans for the future, everything." On Oct. 17, Enron locked down employee 401(k) accounts, preventing employees from moving any of their investments out of Enron stock. Since then, employees have watched in horror as the company's stock plunged more than 70 percent after an announcement of a $618 million third quarter loss.
According to the suit, Enron executives engaged in extensive insider trading prior to the Oct. 16 announcement, gaining millions of dollars in personal proceeds.
The class-action suit seeks to represent as many as 21,000 employees who invested in the Enron Stock Plan between Jan. 20, 1998 and Nov. 20, 2001.
On October 16, 2001, Enron surprised the market when it announced that the company was taking non-recurring charges totaling $1.01 billion after-tax in the third quarter of 2001. Enron later revealed that a portion of the charge was related to the unwinding of investments with certain limited partnerships controlled by Enron's CFO, and the company would be eliminating more than $1 billion in shareholder equity as a result of the unwinding of investments. As this news began to be assimilated by the market, the price of Enron common stock dropped significantly.
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