Thursday, January 13, 2011 11:12:00 AM
Wednesday, NCUA filed a new, 20-page complaint against Western Corporate Federal Credit Union's (WesCorp) outside directors, according to a January 12 article in the Credit Union Times. The report stated that NCUA in the "20 page filing, claims the outside directors ignored red flags, breached their duties, and did not adequately perform their jobs."
Late last year, "presiding Judge George Wu had, in a draft decision, indicated his intention to dismiss complaints against WesCorp's outside directors, including CUNA head Bill Cheney. The judge appeared to root his decision in the facts that the outside directors were not compensated for their service and did not personally profit," according to the report.
In the complaint, NCUA alleges, "In these acts and omissions, the Director Defendants abdicated their responsibilities as directors and failed to perform their duties with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use as a director of a $30 billion corporate credit union." NCUA's filing goes on to state "The NCUA respectfully submits that it has stated a claim against the Director Defendants that is not barred as a matter of law by the business judgment rule."
The Credit Union Times article also reported that "central to the NCUA argument is that precisely because of their positions in the credit union industry, the outside directors ought to have known better."
Source: Credit Union Times (January 12, 2011)