Did you lose your job? All your 401k?

Just curious. I watched The Smartest Men in the Room again last night. I was pretty oblivious to it all at the time as I was in school, and had never live in Houston.

It was a pretty big deal. I've worked with lots of folks that worked at Enron and AA at the time.

My father lost a huge chunk of his retirement and had to go back to work.

The guy in that movie who ran marketing from Enron Broadband (Max Eberts) was actually our English teacher in high school.

I don't remember him wearing that much makeup back then though.

My pops was general counsel at another large Houston based O&G company. After the Enron debacle, he said that he would have people come in everyday for weeks asking EXACTLY what he was doing and how he was doing it. He said it was an extremely tense period of his life.

V&E lost a lot of good employees including a secretary that posts here.

diggity - i cant think who that guy was - what'd he look like - what class year did he teach?

I watched that show again last night also. Don't know which was more appalling, their blatant lying or their arrogance until the bitter end.

My dad lost a huge chunk of his retirement too. My parents ended up having to move to Omaha when Buffet bought the pipline he worked for, and my mom had to go back to work. She would have gone back to work anyway once my sister and I finished high school, but after Enron she HAD to go back. They are back in Houston now, but they are a long way from being able to retire, and the retirement they had planned is now pretty much a pipe dream.

I worked there so I lost my job. It took 3 months to find another job but after a couple years when all the severance came in I actually came out ahead.

I made out better than most people but I was only a year out of school so retirement losses were minimal. In hindsight going through that experience taught me a lot.

i still can't get over how smart they really were. the problem is they got way in over their heads. i mean, they were trading weather

I only lost a little..whatever they had recently given in bonus in stock. Everything else in my 401K was in mutual funds, no Enron stock. I had even sold what I could that I had in Enron stock (one of our bonuses, we could sell the stock right away). I was only there about 2 years and I came out nicely with the 401K and with the severance payments.

I did lose my job, but 2 months later they brought me back on contract, for about two months until I found a permanent job. Headhunters were calling into our office daily looking for people.

[This message has been edited by randy828 (edited 7/8/2009 2:26p).]

I just started reading that book. Pretty interesting stuff. Not anything that overly surprises me yet...although i am only through the first chapter. I am guessing the movie left out a lot.

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diggity - i cant think who that guy was - what'd he look like - what class year did he teach?

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He took over for a while when Venza had his heart attack.

Eberts was there half of '94 and all of '95. I think he was fired after my freshman year.

I bought $50 of Enron after they declared bankruptcy (@ 0.32/share) on a pure gamble. I never sold, and eventually the stock ceased to exist. So I went to Ebay and bought an Enron hat for $5 which is about what the stock was worth before it disappeared.

So I ended up with a hat and a $45 story.

wouldnt that be a hat and a $55 story?

My favorite person in the cast of characters that was at Enron has to be Lou Pai. The guy may have been the smartest, and he was certainly the most awesome. After years of being a total baller at Enron (during which time he racked up legendary company expenses at area strip clubs) Pai's wife got wind of his stripper girlfriend and in the process of splitting assets for the divorce, Pai had to sell his Enron stock at the peak - giving him a freaking genius alibi for getting out before the crash and enabling him to 1) Stay out of jail and 2) Have enough money to buy the 2nd biggest ranch in Colorado (which included a 14,000'+ peak). Pai settled out of court for $30m in the civil case, sold the ranch for reportedly double what he paid for it (guy just can't lose), and now the little Chinaman and his stripper girlfriend's whereabouts are unknown. Basically, he is my hero.

he started a new company here

I was supposed to go work for one of their clients, and had already signed a full time offer during my senior year in college. About a month before I graduated I was told that I no longer had a job. Needless to say that I graduated without a job, but got on somewhere else shortly after.

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i still can't get over how smart they really were. the problem is they got way in over their heads. i mean, they were trading weather

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Maybe I'm just heartless and this isn't meant to attack anyone personally, but the people who purposely put kept a large portion of their 401k funds in Enron stock to see it all vanish are somewhat hard to feel sorry for. Now to be clear, I'm not talking about bonus in stock that couldn't be sold due to restricted nature or the losses suffered when, as I understand, the *******s in management changed 401k administrators which in effect prevented people from dumping shares near the end. At this point, most of fall in stock price already occurred if I remember correctly.

You had people who took huge 401k balances that were previously in a nice balanced set of mutual funds and consciously moved it into a very fast growth company's stock so your risk level change tremendously. For this risk many people were reward with very high returns for several years (see Lou Pai), but then the bottom fell out. I don’t know why someone would put all their eggs in one high-risk basket for retirement – it’s not like we were talking about “play” money.

You had people who took huge 401k balances that were previously in a nice balanced set of mutual funds and consiously moved it into a very fast growth company's stock so your risk level change tremendously.

Lou Pai is hawking emmission credits somewhere in West Houston these days.

I purchased the Playboy with the Ladies of Enron in it (and Dita Von Teese). Good investment.

Also, what AgCPA said. Enron is a perfect example of why it is really important for an individual to understand the total business they are in as a whole and not just their job function.

No effect on me or anyone I know. Very fortunate.

Swampfox,

Sounds like Lou Pai was a lucky guy. Just curiuos where you got all of your information. Sounds like you know a lot about the guy.

Ruinous idiotic Sarbanes Oxley legislation that added about a 7% overhead to practically every business in the nation....

I worked for AA at the time and Enron was a client. I had to find another job but that worked out well for me though.

CPA,

You are right that people (including my dad) had way way too much of their nest eggs invested with Enron. Of course they should have known better. My dad knows it, and it kills him constantly that he could have and should have diversified when he had the chance. It really dawned on me when I had to do a project in grad school valuing executive stock options. Part of the analysis was adjusting the exercise patterns to account for diversification needs of executives who hold vast amounts of their company's stock. That's when the vastness of the lies really set in for me.

The big wigs at Enron played on the naivety and trust of their employees. They had the entire world fooled for a long time thinking Enron was one of the strongest and greatest companies in the world. If they can convince analysts and banks imagine how easy it is to convince a mid level IT manager.

Again, my dad should have known better and sold just for diversification reasons, but it was a pretty amazing culture that they created there. People there thought Ken Lay was a God, and he lied to their faces and asked them to trust him and hold the line. The entire time he knew the whole thing was about to blow up.

For the people that lost a lot, I know that they were partially (maybe largely) to blame. That doesn't change the fact that they were preyed upon by their employer and hung out to dry. I will always feel sorry for them for that.

I worked for JPMorgan Chase at the time and my ex-wife worked for Dynegy so needless to say it impacted both of our jobs a little bit. For those that may not remember, JPMorgan's stock dropped to about $15 per share from $52. I wished I had more liquidity because I would have loved to have bought tons of the bank stock as the pressure down on the stock wasn't warranted. It was nice though that we did get some stock options in the $20 range that I was able to sell off near $50 afterwards.

Several of my cube mates had to go to testify in front of the Senate, too, which made things little stressful around the office. As for Dynegy, we all know that took a pretty big hit at that point, too.

There were many valuable lessons I learned on the credit side espcially in dealing with high net worth individuals.

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For the people that lost a lot

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if your stock was overinflated, did you really lose THAT much? obviously your initial investment, but i laugh when i hear people talking about losing X amount and X is some hugely overinflated BS number that was giving them unreal returns.

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I worked for JPMorgan Chase at the time and my ex-wife worked for Dynegy

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Wow. Just wow.

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i mean, they were trading weather

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"trading weather" isn't really what it sounds like.

its primarily hedge activity. Lots of shops do it.

Lots of Enron people where i work. Most of them really know their stuff. A few of them lost hundreds of thousands.

the book "smartest guys in the room" talks about Lou Pai and how he made out so well and how hard he balled at tine tit clubs. i recommend reading it to anyone that is interested. good read.

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Swampfox,

Sounds like Lou Pai was a lucky guy. Just curiuos where you got all of your information. Sounds like you know a lot about the guy.

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Well... in case you are unfamiliar with my style, I was being tongue in cheek by gushing with admiration for the guy. He an ass who got REALLY lucky. He's also brilliant...so how much was luck? We'll most likely never know. All the info comes from "The Smartest Guys in the Room". I claim no special knowledge, nor do I know the guy. If he is in the emissions credit business...well...that tells you all you need to know about THAT scam. Cap and Trade? This idea brought to you by ENRON.

Sure, people who had their whole (or most of their) retirements locked up in Enron ultimately need to point their fingers at themselves for being so brazenly undiversified and so vulnerable, but it is true that the culture there was pretty unreal. Ken Lay was seen as this man of steel and their own company was viewed, inside and out, as one of the best and most powerful in the world...

My brother worked for Enron and got out right after the all AA drones came in blowing smoke up everyones ass. Said he would be in meetings with these guys and they didn't make a lick of *****ing sense, so he left and took his money with him. He did quite well while some of friends stayed and took major hits.

Remember that the books you read probably rely on info from public sources and may not have all the facts. Most people keep their finances to themselves and don't submit info to people who will publish it. It is amazing how many people thnk that the execs made away with a ton of money. Just as reading the forbes list, there are usually many items that are left out of the equation.

Not going to comment on more than that but don't believe everything you read.