Source: www.law.umaryland.edu
Topic: Stock Investment
Sort Desciption: Company stock and investment risk. As noted earlier, a fundamental .... offer employer stock as an investment option were invested in equity funds. ...
Content Inside: Congressional Research Service ˜ The Library of Congress Report for Congress Received through the CRS Web Order Code RL31507 Employer Stock in Retirement Plans: Investment Risk and Retirement Security Updated January 28, 2003 Patrick J. Purcell Specialist in Social Legislation Domestic Social Policy Division Company Stock in Retirement Plans: Investment Risk and Retirement Security Summary The financial losses suffered byparticipants in the Enron Corporation’s 401(k) retirement plan received wide publicity and prompted questions about the laws and regulations that govern these plans. In the wake of the Enron bankruptcy, numerous bills were introduced in the 107th Congress with the intent of protecting workers from the financial losses that employees risk when they invest a large proportion of their retirement savings in securities issued bytheir employers. Enron is not theonly company whose employees and retirees have seen the value of their retirement accounts reduced by a plunge in the company’s stock price. Employees of Rite Aid, Lucent Technologies, Nortel Networks, Qwest Communications, the Williams Companies, Providian Financial Corporation, IKON Office Solutions, Global Crossing, and WorldCom also have had their retirement accounts substantially reduced by sharp drops in the price of the companies’ stock. This CRS Report begins bydescribing the shift from traditional defined benefit pensions to defined contribution plans – like the 401(k) – that has occurred over the last 20 to 25 years. It then summarizes recent research findings on the extent to which employees’ retirement savings are invested in employer stock. The third section of the report outlines the provisions of federal law that define an employer’s dutyto manage its retirement plan in the best interest of the plan’s participants. The report concludes with a summary of pension reform legislation passed by the House of Representatives in April 2002 and a description of sev ...
enron bankruptcy retirement plan