Reply #19: 10 Ex-Directors From WorldCom to Pay Millions [View All]

http://www.nytimes.com/2005/01/06/business/06tele.html?oref=login

en former directors of WorldCom, the telecommunications company whose bankruptcy was the largest in history, have agreed to pay $18 million of their own money to settle a class-action lawsuit by investors who lost hundreds of millions of dollars when the company collapsed in July 2002.

The agreement by directors to dig into their own pockets, which is part of a $54 million settlement with plaintiffs led by the New York State Common Retirement Fund, is a remarkable concession. Directors have always relied on their company's insurance to cover costs associated with securities cases and settlements.

Yesterday's settlement is a disturbing precedent for directors, whose duties to look after shareholders' interests have come under harsh scrutiny in the three years since the failure of Enron.

Investors have become increasingly frustrated as company directors and officers escaped financial responsibility for losses incurred as a result of fraud.

Companies whose executives are accused of engaging in fraudulent practices typically pay those executives' legal bills and the fines that can result when regulatory proceedings against them are settled. And directors almost never pay in such settlements because they are covered by insurance.

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Their OWN money! Sheesh, yeah I suppose that ill-gotten booty could be considered their own now, possession IS 9/10 of the law or some such BS. :eyes: :grr: