WesCorp’s Top Guns to Face Trial in Suit Brought by Regulator
A federal court ruling dismisses negligence charges against directors of WesCorp but key executives still face trail in a civil suit claiming their actions caused the huge corporate to fail.
August 2, 2011
Top WesCorp executives will face trial in a civil suit brought by the National Credit Union Administration (NCUA), a federal judge ruled this week. The court ruling is a mixed bag for the WesCorp management team; it dismisses negligence charges against the directors of the failed corporate credit union but still calls the executive management team to court in the civil case.
The civil suit brought by the NCUA alleges mismanagement caused the once giant corporate to fail.
The Credit Union Journal reports the trail may embarrass the NCUA because the regulator had examiners working on site during the corporate’s demise.
In its heyday, WesCorp boasted $34 billion in assets. After its collapse in 2009, the regulator controlled the operation as a bridge corporate. The bridge is scheduled to liquidate and re-charter in October 2011.
After the regulator urged credit unions to support and invest in the corporate credit union structure, many Oregon and Washington credit unions answered the call, purchasing term certificates in WesCorp valued at over $61 million. Upon liquidation, the NCUA will force early redemption of those certificates, meaning a loss of interest income to the credit unions that invested.
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