PRINTER'S NO. 1706
No. 160 Session of 2002
INTRODUCED BY O'PAKE, MELLOW, WAGNER, MUSTO, KASUNIC, STOUT,
SCHWARTZ, COSTA, A. WILLIAMS, BODACK, FUMO, HUGHES, BOSCOLA,
KITCHEN, KUKOVICH, STACK, LAVALLE, TARTAGLIONE, WOZNIAK,
C. WILLIAMS AND LOGAN, FEBRUARY 4, 2002
REFERRED TO RULES AND EXECUTIVE NOMINATIONS, FEBRUARY 4, 2002
A RESOLUTION
1 Requesting the Joint State Government Commission to create a
2 task force to review Pennsylvania law governing pension fund
3 investments.
4 WHEREAS, Employer-provided profit-sharing plans and 401(k)
5 plans are among the most popular sources of retirement income
6 for the citizens of this Commonwealth and the United States; and
7 WHEREAS, Recent figures reveal that as of 1998 more than 50
8 million Americans were accumulating retirement savings through
9 employer-sponsored defined contribution plans such as profit-
10 sharing plans and 401(k) plans; and
11 WHEREAS, Employer retirement plans often require or strongly
12 urge employees to invest a certain portion of their 401(k) or
13 other retirement plan in the employer company stock; and
14 WHEREAS, Employers often match employee contributions to
15 401(k) plans with company stock rather than cash; and
16 WHEREAS, The volatility of the stock market coupled with
17 retirement plan rules and the actions of third parties often
1 leaves employees with 401(k) and similar retirement plans
2 vulnerable when it comes to ensuring that the retirement savings
3 the employee has accrued are available to the employee upon
4 retirement; and
5 WHEREAS, Recent history highlights risks relating to the
6 security of an employee's 401(k) or other employer-sponsored
7 retirement plan; and
8 WHEREAS, Risk associated with investing 401(k) funds in
9 employer stock is readily apparent in the recent events at
10 Lucent Technologies and the collapse and subsequent bankruptcy
11 filing of Texas-based energy company Enron Corporation; and
12 WHEREAS, Until 2001, Enron Corporation ranked number 7 on the
13 Fortune 500 list of the United States' largest corporations; and
14 WHEREAS, The business and accounting practices of Enron
15 Corporation's management contributed to Enron's stock price
16 dropping from approximately $90 per share in August 2000 to less
17 than $1 per share in January 2002; and
18 WHEREAS, In December 2001, Enron filed for Chapter 11
19 bankruptcy protection in the State of New York; and
20 WHEREAS, Enron Corporation's bankruptcy filing is the largest
21 in the history of the United States; and
22 WHEREAS, Enron's collapse has adversely affected the
23 retirement savings of thousands of Enron employees who
24 participated in the company's 401(k) plan and thousands of other
25 investors who relied on Enron management to act in the best
26 interests of its employees and shareholders; and
27 WHEREAS, Reports indicate that approximately 60% of all Enron
28 employee 401(k) money was invested in Enron stock; and
29 WHEREAS, Despite the spiraling stock price, Enron employees
30 participating in the company's 401(k) plan were prohibited from
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1 selling the Enron stock held in the plan in the months leading
2 up to the company's ultimate collapse; and
3 WHEREAS, Many of Enron's 20,000 employees lost their
4 retirement savings when Enron collapsed; and
5 WHEREAS, More than 4,000 employees were left unemployed due
6 to Enron's collapse; and
7 WHEREAS, The facts and circumstances leading to Enron's
8 collapse have led to numerous investigations into the company's
9 business and accounting practices; and
10 WHEREAS, Enron Corporation is currently being investigated by
11 the United States Securities and Exchange Commission, the United
12 States Department of Justice, the United States Department of
13 Labor and at least five congressional committees; and
14 WHEREAS, At least 60 lawsuits have been filed on behalf of
15 Enron shareholders and employees as a result of the Enron
16 collapse; and
17 WHEREAS, As of January 2002, the New York Stock Exchange has
18 suspended trading of Enron shares and has moved to delist the
19 company; and
20 WHEREAS, Public confidence that corporate management will act
21 in the best interests of its employees and shareholders is
22 crucial in a market-driven capitalist economy; and
23 WHEREAS, Maintaining the integrity of the retirement plan
24 system and public confidence in that system is vital to the
25 United States economy and the economy of the Commonwealth of
26 Pennsylvania; and
27 WHEREAS, A vast number of Pennsylvania workers directly
28 participate in various forms of retirement plans which include
29 pension plans, profit-sharing plans and 401(k) plans; and
30 WHEREAS, Pennsylvania workers contribute a significant amount
20020S0160R1706 - 3 -
1 of their savings to these plans for purposes of ensuring that
2 they will be prepared financially to provide for themselves and
3 their family upon retirement; and
4 WHEREAS, Pennsylvania workers often place great confidence in
5 their employers and other entities coordinating their retirement
6 plan as relates to the investment of funds and management of
7 retirement assets; and
8 WHEREAS, Pennsylvania workers and their families depend on
9 their pension funds and deserve tough laws that protect their
10 investment in these funds from fraudulent activities by company
11 executives, investment advisors or their agents; therefore be it
12 RESOLVED, That the Senate request that the Joint State
13 Government Commission create a task force to review State law
14 governing pension fund investments to ensure that the
15 Commonwealth adequately protects Pennsylvania workers and
16 investors from the fraudulent and criminal activity of company
17 executives, pension fund investment advisors or their agents
18 which jeopardizes the retirement assets of Pennsylvanians; and
19 be it further
20 RESOLVED, That the task force also review State laws which
21 govern licensure of accountants and prohibit fraudulent
22 activities in the representation of clients; and be it further
23 RESOLVED, That the task force issue a report on its findings
24 and recommendations on proposed legislation to the General
25 Assembly by June 30, 2002.
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