The SEC Settlement with the Settling Parties who participated in the Fraud at Enron
Eligibility for Payment
Questions about the Proof of Claim Form
After Your Proof of Claim is Submitted
Effect of Submitting a Proof of Claim
CLAIM PROCESS FOR INSTITUTIONAL FILERS
Getting More Information
The SEC Settlement with the Settling Parties
1. What are the details of the SEC’s Settlement with the Settling Parties?
As a result of their investigation of the securities fraud that took place at Enron, the U.S. Securities and Exchange Commission (“SEC”) commenced several civil enforcement and administrative cease-and-desist proceedings seeking recovery for damages allegedly caused by the fraud. Proceedings were commenced against numerous parties, including J.P. Morgan Chase & Co.; Merrill Lynch & Co., Inc.; Canadian Imperial Bank of Commerce; Citigroup, Inc.; Daniel Ferguson; Ian Schottlander; Mark Wolf; Kenneth D. Rice; Kevin P. Hannon; Raymond M. Bowen, Jr.; Wesley H. Colwell; David W. Delainey; Mark E. Koenig; Paula J. Rieker; Cheryl I. Lipschutz; and Lou L. Pai (hereinafter designated as the “Settling Parties”). The Settling Parties collectively have paid approximately $450 million as part of their settlements of the SEC actions. The proceeds of these settlements were contributed to a fund to be distributed to investor victims of the fraud (the “Fair Fund”). On October 8, 2008, Judge Melinda Harmon of the U.S. District Court for the Southern District of Texas approved a Distribution Plan for the Fair Fund.
Eligibility for a Payment
2. Who is eligible to participate in the distribution of the Fair Fund?
If you purchased Eligible Securities (as defined below in Question 5) between January 20, 1998 and November 7, 2001, inclusive (the “Fraud Period”), you are potentially eligible for a payment from the Enron Victim Trust.
3. Who is not eligible to participate in the distribution of the Fair Fund?
You are not eligible to participate in the distribution of the Fair Fund if you are or were:
- A director or officer, or former director or officer, of Enron Corp. or any of the Corporate Settling Parties or any of their past respective past or present Affiliates who served in such capacity on or after the commencement of the Fraud Period;
- An employee or former employee of Enron Corp. or any of the Corporate Settling Parties or of any of their respective Affiliates who has been terminated for cause in connection with the fraud described in the SEC’s complaints in this action, or who was otherwise terminated or has resigned in connection with the investigations conducted by the SEC;
- A current or former employee, officer or director of Enron or any of the Corporate Settling Parties who had been charged criminally in connection with the accounting fraud at Enron;
- A defendant in any action brought by the SEC or any class action lawsuit based upon the Enron Securities Fraud as described in the SEC’s complaints in this action, provided that such entity shall only be excluded from asserting a Proof of Claim for its own account, and is not barred from asserting a Proof of Claim in a representative capacity for an otherwise Potentially Eligible Claimant;
- A Corporate Settling Party or any of their respective subsidiaries or Affiliates;
- Richard C. Breeden (the Fair Fund Distribution Agent), his immediate family members and those persons assisting him in his role as Distribution Agent; or
- Heirs, distributes, spouses, parents, children or controlled entities of any of the foregoing persons.
4. Do I have to prove I suffered a monetary loss on my purchases of Enron Corp. shares to be eligible to participate in the recovery?
No. The Distribution Agent will compute your eligible losses (if any) using the information you provide in your Proof of Claim Form.
5. What securities must have I purchased to be eligible to participate in the recovery?
The following securities are Eligible Securities under the terms of the Distribution Plan:
| Security | Symbol | CUSIP | ISIN |
| Enron Corp. Common Stock – ENE | ENRNQ | 293561106 | US2935611069 |
| Enron Corp. Convertible Preferred Stock | EONOQ | 293561601 | US2935616019 |
| Enron Corp. Exchangeable Preferred Stock | EONPQ | 293561882 | US2935618825 |
6. I was an Enron employee and acquired shares through one or more employee benefit programs. Do these shares qualify me for a payment?
The eligibility of shares acquired through an employee benefit program varies by program. Please note that in some cases the plan administrator will file a claim on behalf of all participants (although we anticipate that any distribution will be paid directly by the Enron Victim Trust to plan participants). In these cases, plan participants do not need to do anything at this stage with respect to Eligible Securities acquired through benefit plans, but still must file a separate claim relating to any Eligible Securities they held directly. The relevant benefit plans and rules are as follows:
Enron Corp. Savings Plan and Enron Employee Stock Ownership Plan (ESOP): Shares purchased through these plans will generally qualify for a claim, but the claim will be filed by the independent fiduciary of the plans. Individual Plan participants do not need to do anything with respect to Eligible Securities acquired through these benefit plans. Individuals will need to file a claim for any shares received as a distribution from the plans, or for any shares transferred from either of the plans to an IRA, during the period from January 20, 1998 through November 7, 2001.
The Distribution Agent has begun providing notices to plan participants who received shares of Enron common stock through an in-kind distribution or a transfer or rollover to an IRA from either or both the Enron Corp. Savings Plan and the ESOP. The notice, which is only being provided to plan participants who may benefit from submitting additional documentation or a separate claim, provides detailed instructions for participants to follow to ensure any shares of common stock received as a result of either a distribution or a transfer or rollover to an IRA are appropriately considered when determining a participant's eligibility to recover from the Enron Victim Trust.
Stock Plans: Shares purchased by exercising employee stock options will generally qualify for a claim, which is to be filed by the individual participant. However, the exercise of options from which you received cash only, and which did not result in the holding of shares, is not an eligible transaction. Note that for purposes of determining eligibility under the Distribution Plan, the relevant date is the date of option exercise, not the date on which the option was granted.
7. Do shares purchased by reinvesting dividends qualify for recovery?
Yes, shares purchased by reinvesting dividends are potentially eligible for recovery. Note that you must provide documentation for each purchase, including the date of purchase and the number of shares. If fractional shares were purchased, round to the nearest whole share.
8. What is the proper date to use when listing my stock purchases and sales?
The “Trade Date” is the proper date to use when listing your stock purchases and sales. Many broker transaction statements provide both a Trade Date and a Settlement Date. The Trade Date is the correct date to use for purposes of completing a Proof of Claim Form. Note that the method of paying for the shares, or the timing of payments made for the shares, does not factor into your eligibility.
9. I inherited (or received as a gift) Enron Corp. shares. Am I eligible to file a claim?
Your eligibility is dependent upon when the shares were originally purchased. If the original owner purchased the shares during the Settlement Period, then you may be eligible for a recovery. You must include copies of broker statements or other documentation of the original purchase with your claim. In addition, you must provide documentation of the transfer of the shares to you, such as the broker statements for the period in which the transfer occurred. In the case of an inheritance, you should attach copies (please do not send originals) of any legal documentation showing you are the legal recipient of these shares. If the original owner purchased the shares prior to the Settlement Period, the shares would not be eligible for recovery. In addition, shares gifted by Enron Corp., or by any affiliated company, to its employees will not be eligible for recovery.
10. Am I eligible to recover if I purchased Eligible Securities before January 20, 1998 or after November 7, 2001?
No. The Distribution Plan approved by the Court provides that only purchasers of Eligible Securities between January 20, 1998 and November 7, 2001, inclusive, are potentially eligible for a recovery from the Fair Fund.
Questions about the Proof of Claim Form
11. How do I file a claim?
You must complete and sign a Proof of Claim Form, attach the required supporting documentation, and mail it to the Distribution Agent so that it is received on or before April 6, 2009. Submit the completed Proof of Claim Form to:
Enron Victim Trust
P.O. Box 6979
Syracuse, NY 13217-6979
12. How do I obtain a Proof of Claim Form?
You can download and print a Proof of Claim Form from Enron Victim Trust’s website, www.enronvictimtrust.com, or you may ask the Distribution Agent to mail you a Proof of Claim form by calling toll free (866) 225-3511, by emailing a request to info@enronvictimtrust.com, or by writing to the address above in Question 11. Remember to provide your complete name and mailing address.
13. What is the deadline for submitting the Proof of Claim Form?
All Proof of Claim Forms must be received by the Distribution Agent on or before February 15, 2010.
14. Do I need to submit supporting documents with my Proof of Claim Form?
Yes. You must provide with your completed Proof of Claim Form documentation of (a) the number of shares you held as of the close of markets on January 19, 1998, if any; (b) all of your purchases and sales of Eligible Securities during the Settlement Period (showing trade date and number of shares purchased or sold); and (c) the number of shares you held as of the close of markets on November 7, 2001, if any. All documentation must identify the account owner’s name and account number (no handwritten modifications.)
Please do not send the originals of your supporting documentation; be sure to provide copies. The types of documents that are sufficient to support your claim include:
- monthly stock brokerage or other investment account statements;
- broker trade confirmation slips; or
- a signed letter from your broker on firm letterhead verifying the transaction information you have provided.
If you do not submit documents with your Proof of Claim Form to verify your holdings of Eligible Securities during the Settlement Period, we will be unable to validate your claim. Determination Notices detailing any deficiencies that remain in your claim will be mailed after your claim has been reviewed. You will have an opportunity to submit additional supporting documentation at this time.
15. What if I cannot provide all the required supporting documents with my Proof of Claim Form?
It is very important that you provide copies of documents that support the positions and transactions listed on your Proof of Claim Form. Failure to do so may invalidate your claim. If you cannot locate these documents within your personal records, contact your broker or other account representative and request copies of the documents you need.
16. My broker is unable or unwilling to provide copies of the statements I need (and I cannot locate the statements within my personal records). What should I do?
If you cannot locate the required documentation after taking all of the actions described above, please call our toll-free number, (866) 225-3511, for assistance.
17. Will the information I send be kept confidential?
Yes. The Distribution Agent will protect the privacy of the information you provide. The information in your Proof of Claim Form and your supporting documents will be used solely for the purpose of processing your claim. RCB Fund Services LLC, the administrator of the Fair Fund, is a Safe Harbor Certified company. For more information, see our Privacy Policy located on this website.
18. Why does the Proof of Claim Form ask for my phone number and email address?
The Distribution Agent may need more information from you in order to process your Proof of Claim Form. The Proof of Claim Form asks for your phone number and email address so you can be contacted more promptly if additional information is needed.
19. I purchased Eligible Securities, but they were held in my broker’s name. Who should complete the Proof of Claim Form?
The beneficial owner of the eligible stocks should complete the Proof of Claim Form. If you purchased the stocks but they were registered in your broker’s name, you are the beneficial owner.
20. I held Eligible Securities in more than one account. Should I file separate Proof of Claim Forms for each account?
You should include all of your purchases and sales of Eligible Securities during the Settlement Period on one Proof of Claim Form, even if they were purchased or held using several different brokers or accounts.
21. I participated in an Enron Corp. stock purchase program that resulted in numerous monthly purchases and/or quarterly dividend reinvestments. How should I proceed in filing a claim?
If your trade documentation contains transaction information for all of your share acquisitions, whether by periodic purchase or dividend reinvestment, you may write “see attached” where the share information is requested on pages 2, 3 and 4 of the Proof of Claim Form, and provide us with copies of all applicable transaction statements. We will then process your claim based on the information on those statements and we will notify you if we require additional information.
22. If I was a co-owner of an Eligible Security, do we both need to sign the Proof of Claim Form?
Yes, all beneficial owners must sign the Proof of Claim Form. However, if your co-owner is deceased, please read the next question below.
23. What should I do if the investor has died? How should the Proof of Claim Form be completed?
If there is only
one investor and that investor has died, the executor or administrator of the estate should sign the Proof of Claim Form and add his or her title (for example, “Executor of the Estate of John Doe”). If no estate was opened, or the estate is now closed, all the legal heirs of the investor should sign their names on the Release Form, and add the word “Heir”. In either circumstance, you should attach copies (please do not send originals) of any legal documentation providing evidence you are the executor or administrator of the estate, or the legal heir of the deceased.
If you had a
co-owner who has died, you should sign the Proof of Claim Form yourself, and send copies of documents that show:
- The co-owner has died (for example, a copy of the death certificate); and
- You are legally entitled to the co-owner’s interest in the stocks.
After Your Proof of Claim Form is Submitted
24. Will I be notified whether my claim is accepted or rejected?
The Distribution Agent has begun distributing Determination Notices to claimants who submitted Proof of Claim Forms. If you agree with the determination set forth in this Notice you do not need to take any action at this time. If you are dissatisfied with the determination set forth in the Determination Notice, you may file a written request for reconsideration with the Distribution Agent, which may not exceed five pages (not including exhibits) and must clearly explain the basis of your disagreement. All information submitted in attempting to cure deficient claims must be received by the Distribution Agent no more than 30 days after the date your Determination Notice is mailed to you.
25. How much will I be paid if I am eligible for a recovery?
If you are determined to be eligible, the amount of your recovery will be based on the dates of your purchases and sales, the number of shares you purchased and/or sold, and the application of the appropriate "fraud inflation factors", which are used to show the impact of Enron’s false reporting on the price of its common and preferred stock.
Your payment will be based on your "Eligible Loss Amount", which is calculated by first applying a "fraud inflation factor" to each of your purchases based on the date of each of your eligible purchases of common or preferred stock. Next, if the stock was later sold, a separate "fraud inflation factor" will be applied to the stock as of the date of the sale. Therefore, a claimant’s Eligible Loss Amount will be the total of all Eligible Loss Amounts on purchases of an Eligible Security during the Fraud Period, less any fraud-inflated gain realized on sales of the Eligible Security during the Fraud Period. The fraud inflation factors were developed by an expert economist and approved by the SEC and the Court.
If the total amount of all eligible claims exceeds the amount available in the Fair Fund, each claimant will receive a pro rata payment.
You can read a more detailed explanation of how payment amounts are calculated and view the fraud factor tables in the Appendices to the Distribution Plan, available on this website.
26. Will I have to pay taxes on my payment?
The taxability of any payment you receive will depend on your own individual tax circumstances. We cannot provide tax or other legal advice on this matter. If you have tax questions, you should contact a local tax preparer or advisor. IRS 1099 Forms will not be issued for Fair Fund distributions.
27. What should I do if I move after I submit my Proof of Claim Form?
If you move after you file your Proof of Claim, please be sure to provide your new address to ensure that we are able to contact you in the event you are eligible to receive a payment. You can update your address by calling (866) 225-3511, sending an email to info@enronvictimtrust.com, or writing to:
Enron Victim Trust
P.O. Box 6979
Syracuse, NY 13217-6979
Effect of Submitting a Proof of Claim
28. Am I giving up any legal rights by filing a Proof of Claim Form?
No. By participating in the distribution of the Fair Fund you are not forfeiting any rights or claims you may have against any of the Settling Parties or their and Enron’s past or present directors, officers, advisors or agents (other than with respect to the Distribution Agent). You may still file your own lawsuit or participate in any class action lawsuit brought against any of the Settling Parties relating to your purchases of shares in Enron Corp.
29. If I submit a claim to the Enron Victim Trust, may I still sue or join a class action against the Settling Parties?
Yes. Because you are not forfeiting any legal rights by submitting a claim to the Enron Victim Trust, you may, if you wish, file your own lawsuit or participate in a class action lawsuit against any of the Settling Parties and their and Enron’s past or present directors, officers, advisors or agents.
30. Is this a class action settlement?
No. The Fair Fund is the result of several SEC enforcement actions and administrative cease-and-desist proceedings brought against parties that allegedly were involved in the fraud that occurred at Enron. There is a separate class action settlement being administered by Gilardi & Co. LLC (
www.gilardi.com/enron/securities). You may file a Proof of Claim with the Enron Victim Trust even if you previously filed a claim in the class action case; however, you must submit a separate Proof of Claim Form including documentation to the Enron Victim Trust in order to be eligible to participate in the distribution of the Fair Fund.
31. What should I do if I decide I do not want to submit a Proof of Claim Form?
Your participation in the Fair Fund is voluntary. If you do not wish to participate and potentially receive a payment,
do not complete or send in a Proof of Claim Form. Nothing further is required. Please remember, if your Proof of Claim Form is not received on or before April 6, 2009, you will not be eligible to receive a payment from the Fair Fund.
CLAIM PROCESS FOR INSTITUTIONAL FILERS
32. I am an institutional filer, may I file my claim electronically?
The Distribution Agent has established a procedure to enable institutional claimants to file its claim(s) electronically. If you are a representative of an institutional claimant and would like to file your claim(s) electronically, please contact our Institutional Claims Coordinator at 315.251.6017 for a copy of the electronic filing template.
Getting More Information
33. I still have some questions. Who can I contact?
If you have additional questions, you may contact the Enron Victim Trust for more information in any of the following ways:
- Call our toll-free number (866) 225-3511 (Monday-Friday, 8:30AM – 5:00PM ET);
- Visit our website at www.enronvictimtrust.com;
- Send an email to info@enronvictimtrust.com; or
- Write to:
Enron Victim Trust
P.O. Box 6979
Syracuse, NY 13217-6979