After the Enron Bankruptcy: The U.S. House Legislative Process of Three Bills Designed to Protect Employees Investments and Retirement Assets

This paper will examine the legislative process that The Retirement Security Advice Act of 2001, H.R. 2269, The Employee Pension Freedom Act of 2002, H.R. 3657, and the Pension Security Act of 2002, H.R. 3762, went through in the House of Representatives. The first two bills amend title 1 of the 1974 Employee Income Security Act and the 1986 Internal Revenue Code. H.R. 3762 amends the Employee Income Security Act of 1974 and the Securities Exchange Act of 1934. 

The Retirement Security Act of 2001 is intended “to promote the provision of retirement investment advice to workers managing their retirement income assets.” (H.R. 2269, 2001) The Pension Security Act of 2002 is intended to protect participants in individual account plans from over investment in employer securities and “prohibit[s] insider trades during any suspension of the ability of plan participants or beneficiaries to direct investment away from equity securities of the plan sponsor.” (H.R. 3762, 2002) However, the Pension Security Act of 2002 incorporates many provisions from the Retirement Security Act of 2001. The Employee Pension Freedom Act of 2002 is intended to “provide for improved disclosure, diversification, account access, and accountability under individual account plans.” (H.R. 3657, 2002) 

The Enron bankruptcy in which thousands of Enron employees lost their retirement savings while executives cashed out stock during a “lock-down” period illustrates the need for legislation aimed to protect employee investments. (Gordon, 2002)