Too little, too late: Enron shareholders recover $7.2 billion

Sure, $7.2 billion sounds like a lot of money. And to me, it is a lot of money. But to the people who lost their savings and their retirement, it's not so much. Enron was once worth $68 billion to its shareholders, so at just over 10% of that amount, $7.2 billion will do little for those left holding worthless shares of stock.

To be eligible for part of the settlement, the shareholders had to have purchased stock between Sept. 9, 1997 and Dec. 2, 2001. It's estimated that there will be 1.5 million investors who will get part of the settlement, and they will receive an average of $6.79 per share of common stock (a stock which once was worth over $90 a share). All funds should be distributed by the end of the year.

The settlement is being funded mostly by JP Morgan Chase, Citigroup, and the Canadian Imperial Bank of Commerce, which were accused of participating in the accounting shenanigans that led to the collapse of Enron. This is the largest settlement ever in a securities case, now surpassing the WorldCom settlement of $6.1 billion which was a record at the time. But I'm sure it's no consolation to those whose retirement accounts were wiped out.
And this is why it's so important for the average investor to diversify her or his stock holdings. You don't want to let one company completely ruin your savings and trash your retirement.

How do you diversify? Although mutual funds aren't a perfect investment by any stretch of the imagination, they do help people diversify their holdings. And they don't require much knowledge of the stock market, so the average consumer can invest in mutual funds with relative ease.

Don't make the mistake of investing most of your retirement funds in your employer's stock, or even a couple of outside companies. Work with an investment adviser who can help you better manage your risk so that your nest egg is properly protected.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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