Justinian Lane

Enron: Good. Trial lawyers: Bad.

Ted Frank at Point of Law once again comes to the defense of Enron.  In addition to attacking trial lawyers, he also attacks the Enron employees “foolish” enough to trust that their company wasn’t being run into the ground.

The Washington Post’s Harold Meyerson (“Enron’s Enablers”, May 9) correctly identifies the litigation against Enron’s investment banks as a place where money was stolen from shareholders, but blames the wrong party. The real scandal is that trial lawyers were able to extort $7.3 billion dollars from shareholders of companies that violated no law by threatening dozens of innocent bystanders (many of whom also lost money in the Enron collapse) with bankrupting liability. If William Lerach and his crew thought they had a legitimate chance of winning their suits, they breached their fiduciary duty to their clients by settling for pennies on the dollar and leaving tens of billions of dollars on the table… [The corollary is that if the companies who settled felt they had a legitimate chance of winning their suits they breached their fiduciary duty to their shareholders by settling. - Justinian]

Finally, Meyerson’s article fails to note that no Enron employee was required to hold his entire 401(k) investment portfolio in Enron stock. Charles Prestwood has only himself to blame for the fact that his entire 401(k) was wiped out; if he had followed basic investment principles of diversification, his pension fund would still have several hundred thousand dollars even after Enron’s collapse. [When I worked for Microsoft, my 401(k) was entirely invested in Microsoft stock, as were the 401(k)’s of many of the company’s millionaires.  We believed in our company and were lucky enough not to have crooked executives run our portfolios into the ground.  Frank’s attempt to shift blame to Enron’s employees is shameful. - Justinian]

Source: PointofLaw.com | PointOfLaw Forum: Harold Meyerson on Enron

Regular Corpreform readers will remember that Ted works for AEI, a company which used to count Ken Lay as one of its board members and Enron as one of its funders.  Granted, Lay and Enron were no longer associated with AEI by the time Frank joined the company, but one would assume otherwise by the way Frank routinely jumps to their defense.

Posted at 1:59 PM, May 18, 2007 in Permalink | Comments (0) | TrackBack (0)