WorldCom Directors Agree To Compensate Investors Personally

by Glen Shapiro, LawAndTax-News.com, New York

11 January 2005

It emerged on Friday that ten former directors of collapsed telecommunications firm, WorldCom will be putting $18 million of their own money towards compensating investors who lost money when the financial scandal surrounding the firm erupted.

Although, according to the Associated Press, the exact amount to be paid by each of the directors in return for having their names removed from the pending lawsuit has not yet been decided, the settlement requires each of them to pay at least as much as they received as board members during the period that the accounting fraud was perpetrated.

Lead plaintiff in the case, New York State Comptroller Alan Hevesi welcomed the announcement, observing that:

"It (the deal) says to directors, 'You have liability. Do your jobs.' The job is to demand documents, and ask tough questions...We believe this settlement empowers directors to do that."

The trial of the remaining defendants is set to commence on February 28. However, Hevesi told the AP that he did not rule out reaching a separate settlement agreement before that date.

It also emerged last Friday that board members of bankrupt energy trading firm, Enron are to use $13 million of their own money to settle an investor lawsuit.

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