Some Charges Dismissed In Suit
LOS ANGELES-A federal judge last week dismissed key charges in NCUA's suit against officers and directors of WesCorp FCU, but allowed several other charges to remain, making it increasingly likely there will be a trial in the failure of the one-time $34-billion corporate credit union.
U.S. Judge George Wu dismissed charges by NCUA that the WesCorp figures violated the California Business Judgment Rule in loading up the corporate with risky mortgage-backed securities that eventually failed and caused losses of as much as $7 billion.
But Judge Wu ruled that several other counts should stand, including: breach of fiduciary duty; that WesCorp CEO Bob Siravo and Human Resources Director Robert Swedberg conspired to pump up their retirement accounts, and that Todd Lane, WesCorp's CFO, violated fiduciary duties as a member of its ALM committee. Those issues will be the subject of continued litigation, the judge ruled.
NCUA claims in its suit that the executives and directors of the failed corporate were negligent in loading up WesCorp with risky private label MBS in order to chase the higher yields the securities were paying.