Archive for Sunday, April 27, 2003

Westar sued over retirement accounts

April 27, 2003


— Several Westar Energy workers have filed lawsuits against their employer, claiming mismanagement caused them to lose money in their retirement accounts.

The class-action lawsuits allege that employees' 401(k) retirement plans containing Westar Energy stock fell in value last fall when the company restated earnings and disclosed it had been subpoenaed by the Federal Energy Regulatory Commission over "meaningless" trades with Cleco Corp.

About 30 Westar employees have filed lawsuits U.S. District Court. The suits claim that the company's retirement plan suffered tens of millions of dollars in losses" because substantial assets of the plan were imprudently invested in Westar stock.

The lawsuits were filed against Westar Energy; David Wittig, former chairman, chief executive officer and president; Paul Geist, former chief financial officer and treasurer; Bruce Akin, current vice president of shared services; Larry Irick, corporate secretary and general counsel; and "unknown fiduciary defendants."

The lawsuits claim the company violated the Securities Exchange Act of 1934 by issuing false and misleading statements to the market between March 31, 2001, and Dec. 26, 2002.

Westar spokeswoman Karla Olsen said the company did not comment on pending litigation.

Stock in Westar Energy fell from $20 a share two years ago to a low of $8.50 last fall. The stock closed Friday at $13.56 per share. The stock has been climbing since Jim Haines took over as president and chief executive officer last fall.

Wittig was indicted in November on seven charges each, including making false statements and money laundering, over an alleged loan and land scheme. The allegations do not involve Westar business.

Westar stock is among the investment alternatives available to employees who enroll in the company's 401(k) plan. The company matches employee contributions up to 50 percent of the first 6 percent of each participant's contributions.

Ronald Pope, a Topeka lawyer who represents several Westar employees, acknowledged the case wasn't like those involving Enron Corp., where employees lost virtually all of their retirement savings when Enron declared bankruptcy in fall 2001.

"The stock (in Westar Energy) still has value," Pope said. "We are just critical of the way they managed the 401(k)."

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