PRINTER'S NO. 1701
No. 159 Session of 2002
INTRODUCED BY O'PAKE, MELLOW, WAGNER, MUSTO, FUMO, KASUNIC,
STOUT, BODACK, BOSCOLA, COSTA, LAVALLE, LOGAN, KITCHEN,
KUKOVICH, HUGHES, SCHWARTZ, STACK, TARTAGLIONE, C. WILLIAMS,
A. WILLIAMS AND WOZNIAK, JANUARY 31, 2002
REFERRED TO RULES AND EXECUTIVE NOMINATIONS, JANUARY 31, 2002
A RESOLUTION
1 Urging the Attorney General to take appropriate legal action on
2 behalf of the Commonwealth and its political subdivisions.
3 WHEREAS, Employer-provided profit-sharing plans and 401(k)
4 plans are among the most popular sources of retirement income
5 for the citizens of this Commonwealth and the United States; and
6 WHEREAS, Recent figures reveal that as of 1998 more than 50
7 million Americans were accumulating retirement savings through
8 employer-sponsored defined contribution plans such as profit-
9 sharing plans and 401(k) plans; and
10 WHEREAS, Employer retirement plans often require or strongly
11 urge employees to invest a certain portion of their 401(k) or
12 other retirement plan in the employer company stock; and
13 WHEREAS, Employers often match employee contributions to
14 401(k) plans with company stock rather than cash; and
15 WHEREAS, The volatility of the stock market coupled with
16 retirement plan rules and the actions of third parties often
17 leaves employees with 401(k) and similar retirement plans
1 vulnerable when it comes to ensuring that the retirement savings
2 the employee has accrued are available to the employee upon
3 retirement; and
4 WHEREAS, Recent history highlights risks relating to the
5 security of an employee's 401(k) or other employer-sponsored
6 retirement plan; and
7 WHEREAS, Risk associated with investing 401(k) funds in
8 employer stock is readily apparent in the recent events at
9 Lucent Technologies and the collapse and subsequent bankruptcy
10 filing of Texas-based energy company Enron Corporation; and
11 WHEREAS, Until 2001, Enron Corporation ranked number 7 on the
12 Fortune 500 list of the United States' largest corporations; and
13 WHEREAS, The business and accounting practices of Enron
14 Corporation's management contributed to Enron's stock price
15 dropping from approximately $90 per share in August 2000 to less
16 than $1 per share in January 2002; and
17 WHEREAS, In December 2001, Enron filed for Chapter 11
18 bankruptcy protection in the State of New York; and
19 WHEREAS, Enron Corporation's bankruptcy filing is the largest
20 in the history of the United States; and
21 WHEREAS, Enron's collapse has adversely affected the
22 retirement savings of thousands of Enron employees who
23 participated in the company's 401(k) plan and thousands of other
24 investors who relied on Enron management to act in the best
25 interests of its employees and shareholders; and
26 WHEREAS, Reports indicate that approximately 60% of all Enron
27 employee 401(k) money was invested in Enron stock; and
28 WHEREAS, Despite the spiraling stock price, Enron employees
29 participating in the company's 401(k) plan were prohibited from
30 selling the Enron stock held in the plan in the months leading
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1 up to the company's ultimate collapse; and
2 WHEREAS, Many of Enron's 20,000 employees lost their
3 retirement savings when Enron collapsed; and
4 WHEREAS, More than 4,000 employees were left unemployed due
5 to Enron's collapse; and
6 WHEREAS, The facts and circumstances leading to Enron's
7 collapse have led to numerous investigations into the company's
8 business and accounting practices; and
9 WHEREAS, Enron Corporation is currently being investigated by
10 the United States Securities and Exchange Commission, the United
11 States Department of Justice, the United States Department of
12 Labor and at least five congressional committees; and
13 WHEREAS, At least 60 lawsuits have been filed on behalf of
14 Enron shareholders and employees as a result of the Enron
15 collapse; and
16 WHEREAS, As of January 2002, the New York Stock Exchange has
17 suspended trading of Enron shares and has moved to delist the
18 company; and
19 WHEREAS, Public confidence that corporate management will act
20 in the best interests of its employees and shareholders is
21 crucial in a market-driven capitalist economy; and
22 WHEREAS, Maintaining the integrity of the retirement plan
23 system and public confidence in that system is vital to the
24 United States economy and the economy of the Commonwealth of
25 Pennsylvania; and
26 WHEREAS, A vast number of Pennsylvania workers directly
27 participate in various forms of retirement plans which include
28 pension plans, profit-sharing plans and 401(k) plans; and
29 WHEREAS, It is reported that several states, including New
30 Jersey, Florida and Pennsylvania have lost millions in money
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1 invested in Enron stock by their state public worker pension
2 funds; and
3 WHEREAS, New Jersey lost $60 million in public employee
4 pension funds invested in Enron stock; and
5 WHEREAS, Florida lost $320 million in public employee pension
6 funds invested in Enron stock; and
7 WHEREAS, New York City lost $100 million in public employee
8 pension funds invested in Enron stock; and
9 WHEREAS, Several states and cities, including Florida and New
10 York City, have joined in a Federal stakeholders' lawsuit that
11 charges Enron with securities fraud; and
12 WHEREAS, Pennsylvania workers contribute a significant amount
13 of their savings to these plans for purposes of ensuring that
14 they will be prepared financially to provide for themselves and
15 their family upon retirement; and
16 WHEREAS, Pennsylvania workers often place great confidence in
17 their employers and other entities coordinating their retirement
18 plan as relates to the investment of funds and management of
19 retirement assets; and
20 WHEREAS, The Pennsylvania Public School Employees' Retirement
21 System has lost $59 million in moneys invested in Enron stock;
22 and
23 WHEREAS, It is unknown how many potential millions may have
24 been lost by local governments, school districts and municipal
25 authorities that had money invested in Enron stock; and
26 WHEREAS, The Commonwealth Attorneys Act provides
27 authorization for the Attorney General to represent the
28 Commonwealth in any legal action, including the intervention of
29 a lawsuit; therefore be it
30 RESOLVED, That the Senate of Pennsylvania urge Attorney
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1 General Michael Fisher, as the chief law enforcement officer of
2 the Commonwealth, to take appropriate legal action on behalf of
3 the Commonwealth and its political subdivisions, specifically
4 local governments, school districts and municipalities, against
5 Enron and Arthur Anderson and their respective offices and
6 directors which will assist Pennsylvania's working families and
7 investors in the recovery of funds lost due to the fraudulent
8 activities of Enron, Arthur Anderson and their corporate
9 officers and directors; and be it further
10 RESOLVED, That a copy of this resolution be transmitted to
11 Governor Mark Schweiker and Attorney General Michael Fisher.
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