How Will Michael Kopper’s $12 Million Get Divvied Up?

The $12 million that former Enron executive Michael Kopper agreed to “surrender” as part of a plea agreement is supposed to go to investors. When will Enron shareholders be reimbursed, and how much will they get?

No one yet knows how or when Kopper’s ill-gotten gains will be reallocated. But frustrated shareholders probably won’t be thrilled with the final outcome.

The Sarbanes-Oxley Act of 2002, signed into law on July 30, mandates that all funds obtained from white-collar criminals via disgorgement of assets, civil penalties, or other settlements be funneled into new victims’ restitution funds. It does not, however, include a formula for disbursing the seized money. Instead, it orders the Securities and Exchange Commission to launch a prolonged study of how best to compensate injured investors. There is no timetable on the study’s completion, but it obviously hasn’t advanced much in the three weeks since President Bush signed the bill. All that’s known at this point is that no payments will be made until after the very last Enron case is either tried or settled, which could take years. The money will sit in an interest-bearing account until then.

Thousands of Enron shareholders may be legally entitled to slivers of Kopper’s $12 million, which will result in high overhead costs. Simply notifying potential payees of their rights is an expensive proposition and will whittle down the fund before a single check is written. Until considerable assets are disgorged from other former executives—a near inevitability, now that federal prosecutors have Kopper’s cooperation—Enron investors shouldn’t expect more than token sums. If they’re lucky.

Next question?

Explainer thanks Mark Osler of Baylor Law School.