[Congressional Record Volume 148, Number 2 (Thursday, January 24, 2002)]
[House]
[Page H51]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       ON INTRODUCTION OF EMPLOYEE SAVINGS PROTECTION ACT (ESPA)

  The SPEAKER pro tempore (Mr. Shimkus). Under a previous order of the 
House, the gentleman from Texas (Mr. Bentsen) is recognized for 5 
minutes.
  Mr. BENTSEN. Mr. Speaker, today I am introducing legislation to 
create new legal rights for employees who are induced to make 
investment decisions about their 401(k) or other individual pension 
accounts that are contrary to their own best interests. As one who has 
endeavored to expand opportunities for greater participation in 
employer-sponsored pension plans, I strongly believe that our pension 
laws must be amended to ensure that employers, who have superior 
information as to the financial condition of their business and 
communicate information that they know to be false to influence their 
employees in the administration of their 401(k) accounts, face serious 
legal consequences.
  My bill, the Employee Savings Protection Act of 2002, would ensure 
that employees that were unduly influenced by such information to the 
detriment of their retirement savings can have a legal claim that 
survives bankruptcy.
  I am introducing ESPA in the hopes that employees who participate in 
employer-sponsored plans, such as many of my constituents who were 
employed by Enron, do not meet the same fate as the employees of 
Morrison Knudsen, whose claims against the Idaho firm did not survive 
Chapter 11 reorganization. The claims of Morrison Knudsen employees 
were extinguished by the company's bankruptcy reorganization plan, 
according to a 1999 ruling by the Federal District Court in Boise, 
Idaho. There is a gaping hole in our bankruptcy laws if directors and 
officers or other fiduciaries under the Employment Retirement Security 
Act of 1974 can torpedo the retirement savings of their employees and 
walk away without owing a penny.
  In the case of Enron, we now know that senior management grossly 
mismanaged the company while telling employees that their stock would 
rise. As a result, thousands lost their life savings on the basis of 
faulty information and through no fault of their own. Under ESPA, plan 
fiduciaries that engage in such acts, including officers and directors, 
would be held personally liable for the losses incurred as a result of 
this deception. Further, should the plan fiduciary file for bankruptcy 
protection, this employee claim would be treated as a ``priority'' to 
be fully reimbursed in bankruptcy proceedings, ahead of other unsecured 
creditors. Eligible employee claims could arise from violations 
occurring as early as January 1, 2000.
  Mr. Speaker, our pension laws are very clear as to the duties that 
fiduciaries owe to plan participants. The consequences for breaches are 
substantial. Directors and officers can be held personally liable for 
such breaches. Claims by employees who were damaged because they 
trusted the misinformation imparted by a fiduciary must be protected. 
Our bankruptcy laws must not be used as a cloak behind which employers 
such as Enron who dupe their employees are protected. Mr. Speaker, my 
bill will ensure not only that such claims are protected but that these 
claimants stand ahead of other unsecured creditors in a bankruptcy 
proceeding.
  The time has come for the House to take action. I hope that we move 
on this bill quickly.

                          ____________________