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Compliance December 3, 2002
Williams Companies Hit with Enron-Like Suit
March 12, 2002 (PLANSPONSOR.com) - There were strong
shades of the Enron debacle in a federal court lawsuit
against Williams Companies for allegedly pressuring employees
to buy company stock through their 401(k) plan - even though
the stock's value was plunging.
Reported by Fred Schneyer
The suit against the Tulsa, Oklahoma-based Williams also charged that the company didn’t adequately disclose its true financial decision – particularly the fact that broadband provider Williams Communications Group was close to bankruptcy. Williams also didn’t tell shareholders that it would be liable for $2.5 billion of the Communications Group’s debt since Williams Companies was its corporate parent.
During the past year, Williams’s stock value dropped from $46 per share to just over $14. It now trades around $22.
Williams’ plan rules mandated that its matching contribution be made in company stock and that participants could not transfer company stock assets into other investments. The suit said Williams stock has made up 65% of the plan’s assets since 1999.
More Defendants
In addition to Williams, the complaint names Strategic Investment Solutions Inc., an investment consultant to the Williams plan, as a defendant.
The lawsuit also named 14 Williams directors and executives as defendants. According to the lawsuit, the directors and executives “were positioned such that they had access to adverse undisclosed information about the company’s business, operations, products, operational trends, financial statements, markets and present and future business prospects,” among other information.
The lawsuit is Van Nes v. Williams Companies Inc.