Even as many investors were scrambling to sell Enron stock in its downward spiral, Alliance Capital Management was aggressively buying. By the end of September, Alliance had become the largest shareholder, with about 43 million shares.
Sitting on Enron's board was a senior executive and director of Alliance, Frank Savage. Savage's dual role has raised questions about his allegiances and whether Alliance's position as a money manager was compromised. Many fund companies prohibit executives from sitting on boards of companies in which they invest, though there are exceptions.
Alliance said no conflict existed. Savage was chairman of Alliance Capital Management International, with clients in Africa and the Middle East.
He was not involved in money management "at all," said a spokesman for Alliance, John Meyers. Savage's presence on the Enron board, Meyers said, did not influence Alliance's investments.
Alliance has said that it missed the warning signs on Enron, but it has not disclosed the size of its loss. Savage did not return telephone calls.
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