Former WorldCom directors have agreed to pay investors US$18 million from their own pocket as part of a settlement of charges against them related to the historic accounting fraud that nearly sank the telephone company, New York Comptroller Alan Hevesi announced Friday.
Ten former WorldCom board members have agreed to pay the money as part of a US$54 million settlement with investors who lost billions as fraud was uncovered, said Hevesi, who as trustee for state employee retirement funds in New York was the lead plaintiff in the case.
The direct payments by the board members -- equaling about one-fifth of each one's personal net worth -- are a highly unusual concession in a securities case.
And yet the deal also marks the third such arrangement in resolving the most egregious corporate scandals of recent years: directors at Enron Corp., Global Crossing Ltd. and now WorldCom have agreed to personally chip in to restore a small fraction of the gigantic losses suffered by investors and employees.
That trend fits in with recent efforts by government regulators and prosecutors to force executives to bear more personal financial responsibility for negligence or wrongdoing.
"This is the best form of deterrence," Bruce Carton, executive director for securities class actions services at Institutional Shareholder Services, a top advisory firm for major investment funds, said Thursday before the deal was announced. "If you can get the individuals who are involved to realize there is a prospect of losing personal wealth if they don't do their jobs, then you will possibly influence behavior."
Typically, all financial penalties relating to a director's alleged negligence or wrongdoing are paid by the company and insurance policies which all corporations take out on behalf of their executives.
The deal, which does not resolve all legal claims in the scandal, comes two weeks before the start of a federal trial against WorldCom chief executive Bernard Ebbers on criminal charges he orchestrated the US$11 billion fraud which pushed the company into bankruptcy in mid-2002. WorldCom emerged from bankruptcy last year and now operates under the name MCI in Ashburn, Virginia.
Legal experts said Thursday the settlement might draw strong objections from several corners. These include the big Wall Street firms still facing WorldCom investor suits, other plaintiffs who haven't resolved their claims against the directors, and the two WorldCom board members who declined to take part in the 10-director deal.
It was not immediately clear how much of the US$18 million each of the 10 directors would pay individually. But since each is to pay a set percentage of his or her personal net worth, the agreement does not assign varying proportions of blame for the scandal, according to a source who spoke on condition of anonymity before Friday's announcement .
The 10 settling former board members are James Allen, Judith Areen, Carl Aycock, Max Bobbitt, Clifford Alexander, Stiles Kellett Jr., Gordon Macklin, John Porter, Lawrence Tucker and the estate of John Sidgmore, who died in 2003, the source said.
Wall Street firms, charged with fraudulent representations when selling WorldCom bonds to investors, may object if they feel the directors are not assigned enough blame in the overall scandal. The greater the percentage of liability attached to the directors, the greater the portion of the overall damages would be considered resolved by their settlement -- and the less the banks might need to pay in a settlement.
Citigroup has already agreed to pay US$2.58 billion to settle its portion of the civil suit. J.P. Morgan Chase & Co., Bank of America Corp. and Deutsche Bank AG remain as defendants.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
RSS