Commentary: The Case Of The Vanishing 401(k)s

Gary S. Dreadin cheered when his former Enron Corp. boss Kenneth L. Lay was indicted on July 8. The 39-year-old communications technician for Florida Gas Transmission Co., an Enron joint venture, lost almost $500,000 in his 401(k) and employee stock ownership plan accounts after the energy giant declared bankruptcy in 2001. Encouraged by Lay in Webcasts to employees, Dreadin says, he had poured all his retirement savings into Enron stock. Today, Dreadin is a plaintiff in a class action brought against Enron and Lay on behalf of its workers, whose retirement accounts took a hit of more than $1 billion. "I realize I'll never get back all the money I lost," he says. "But I'll sleep better at night if some of the money comes from Ken Lay's pocket."

Dreadin may have a tough time collecting much from Lay, who's being sued by plenty of others as well, but he stands to recoup at least a fraction of his losses. In May, 20,000 current and former Enron employees struck a tentative $85 million settlement with Enron's retirement-plan administrators and its outside directors. The plans' insurers will pick up the tab, unless creditors in Enron's bankruptcy try to grab it first. The employees' claims against Lay, other executives, and Enron itself are still in court. Lay lawyer Mike Birrer says his client had no responsibility for the 401(k).