How Much Money Did Enron Lose

What Enron Employees Have Lost
Tens of Thousands Hit by Job Losses, Plummeting Stock

Jan. 22, 2002 -- Enron's financial implosion has cost thousands of employees their jobs, and leaves the 14,000 people still employed by the bankrupt energy trader in limbo. Most of those who remain are spending their time working on resumes and looking for other work.

Many of those workers were also Enron shareholders. As stock in the company dropped from more than $80 per share to mere pennies, tens of thousands of people saw their pension and investment accounts depleted or destroyed.

All told, Enron employees are out more than $1 billion in pension holdings. In a cruel bit of symmetry, that's roughly the same amount that a group of 29 Enron executives reportedly amassed while selling stock in the two years preceding the collapse.

Enron's Lessons

Business analysts say there are lessons to be learned from the losses incurred by Enron employees and shareholders. Among them: Analysts urge investors to avoid tying up more than 10 percent of their total holdings in the stock of any single company.

It is common for employers to load their 401K programs with company stock, because there are many tax and cash flow benefits from doing so. Here, Congress may step in. Sen. Barbara Boxer (D-CA) has introduced a bill that would prevent companies from loading retirement funds with more than 20 percent of their own stock.

Stories of individual loss are equally staggering. One 30-year employee lost $1.5 million. Another saw a $2 million portfolio sliced to $4,000. A married couple who both worked at Enron were fired within 30 minutes of each other and lost $600,000 in retirement savings.

Many employees say they stuck with their investments because Enron CEO Kenneth Lay and other executives expressed faith in the company's future -- even amid mounting signs that the company was in a nosedive.

But in late October, as the depth of the disaster became obvious, many employees considered selling the stock in their 401K plans -- but were unable to, for a period of three weeks, under terms of a company freeze rule. For many, that freeze was the final cruelty: In that three-week period, the stock lost about half its remaining value. Meanwhile, executives -- untouched by the freeze -- had been able to unload their stock at $70 or $80 a share.

Congress and the Securities Exchange Commission are investigating what went wrong at Enron with an eye toward preventing similar catastrophes. President Bush has asked his economic team to review the rules and regulations that prohibited Enron employees from bailing out of their 401K plans during that crucial period in October.

Meanwhile, lawyers are helping tens of thousands of Enron victims -- employees, retirees and outside investors -- seek to regain some of their money. At least three class-action lawsuits target Enron executives, directors and consultants, alleging that these corporate officers knew in advance that trouble was brewing and sold their stock accordingly.

The Justice Department has opened a criminal probe, and the SEC is investigating the possibility of illegal insider trading. Lawyers for the executives -- as well as many analysts -- say the stock sales were not illegal. A federal judge in Houston recently refused a request from a New York bank to freeze the assets of the Enron executives.

Sen. Joseph Lieberman (D-CT), who will head one of the many congressional committees investigating the disaster, says it's hard to overstate the implications of Enron's failure: "Everyone in America who either depends on a pension fund... or a 401K plan for retirement security... they have to say to the federal government: 'Hey, protect me. Make sure that this nightmare... never happens to me.'"