- The Washington Times - Saturday, December 15, 2001

HOUSTON (AP) Enron Corp. said yesterday it froze employee retirement accounts packed with its stock while shares plummeted in October and November as part of a routine switch of administrators for the 401(k) program.
The embattled former energy giant, faced with more than 60 401(k)-related lawsuits in state and federal courts, issued a statement yesterday that said employees had plenty of notice of the 10-day freeze and that it was unrelated to the company's swift downfall.
The company said employees were notified by mail Oct. 4 that accounts would be frozen from Oct. 29 through Nov. 12. Enron said several reminders were sent via the company's internal e-mail system before Oct. 29 as well.
"This is just a bunch of baloney," said Steve Berman, a Seattle lawyer who represents Enron employees suing the company in federal court after watching their retirement accounts bottom out during the lockdown.
Mr. Berman said 401(k) accounts were frozen Oct. 17, the day after Enron's release of a $618 million third-quarter loss unleashed an unprecedented descent that landed Enron in Chapter 11 bankruptcy Dec. 2.
"None of my clients have ever mentioned, nor have I seen any of these reminders that Enron supposedly sent out," Mr. Berman said. He also criticized Enron for the freeze, regardless of whether it was planned or not.
A year ago, Enron shares traded near $90. When the earnings loss was released Oct. 16, shares closed at $33.84 on the New York Stock Exchange.
Shares were valued at 62 cents on the NYSE yesterday.
An Enron spokesman did not immediately return a call for comment.
The company's release said Enron decided in February this year to find a third party to administer its 401(k) plan. Enron said a switch to a new administrator typically takes several weeks to ensure accuracy of employee account information transferred.
Enron said that from Oct. 29 to Nov. 13, the first day employees could transfer funds after the lockdown, shares dropped to $9.98 from $13.81.
The company said employees have 20 investment options to choose from in Enron's 401(k) plan. Until recently, the company matched employee contributions of up to 6 percent of their base pay by 50 percent.
"As is the case with most company matching programs, the match was provided in company stock," Enron said.
Enron's downfall was fueled by questionable partnerships that allowed the company to keep millions of dollars in debt off its books while earning profits for some executives. The company also had to restate earnings since 1997, eliminating more than $580 million in reported income in that time span.
More than 5,000 employees in Enron's downtown Houston headquarters and operations in London have been laid off, nearly one-fourth of its worldwide work force of 21,000.
The Securities and Exchange Commission, the House Energy and Commerce Committee and the Justice Department are investigating the company's collapse.

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