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View Diary: Hostess took workers' pension money to fund itself (158 comments)

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  •  they weren't the only option. employees (3+ / 0-)
    Recommended by:
    Sparhawk, nextstep, VClib

    chose to invest in Enron.  401k plans can't get raided.

    •  And if you're not invested in the company stock... (3+ / 0-)
      Recommended by:
      BlackSheep1, nextstep, samddobermann

      ... you get, mmm, reminders about not being a team player? The other options offered were largely theoretical.

      A 401k is not as easy to pilfer as a  defined benefit pension plans but the company has its hands in it and that's what makes for disasters.

      You also have to remember that with control fraud, it's not the shareholders who are pillaging their company but the management who is. The case of a private equity deal is a control fraud squared opportunity, as the actual management is also the "shareholder" through leverage, aka a "shareholder" without barely any equity but with its hands on all the levers. But it's being the management that makes the opportunity, not being a shareholder.

      Without going to the extremes of Enron regarding 401k plans, the conflict of interest can also be of a different, more insidious nature, essentially kickbacks from the plan manager to the company's management, the plan manager paying itself back by pushing shitty (and lucrative for the manager) investments on the employees.

      401k plans should be in the employees hands. The only relation between the 401k and the employer should be that each paycheck, the employer transfers the funds (and the titles in case of a payment in equity) to the plan manager designated by the employee, and that's it. But everything else should be in the employee's hands, like an IRA (and that would spare the nightmare of transferring 401k when changing employers).

      I deal in facts. My friends are few but fast.

      by Farugia on Mon Dec 10, 2012 at 08:00:42 PM PST

      [ Parent ]

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