In a dense, 23-page preliminary decision Judge George H. Wu has handed out holiday cheer to former directors of Western Corporate Federal Credit Union, according to experts who have studied the decision distributed to involved parties on Monday.
The news was stormier for former officers of WesCorp.
The litigation, filed by NCUA against 16 former directors and officers, including onetime WesCorp chief executive Robert Siravo and current CUNA head Bill Cheney, who had served on the WesCorp board, is said to mirror litigation filed by the Federal Deposit Insurance Corp. against former executives and board members of the failed IndyMac Bancorp.
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Regarding the WesCorp directors, sources said the judge has indicated his intention to dismiss the complaints. The directors, sources explain, apparently operated within the scope of acceptable business judgement and their conduct never rose to the level needed to find breach of fiduciary duty or gross negligence. As regards gross negligence charges, the judge further indicated skepticism that there was any basis for such a complaint in California law.
Additionally, the judge seemed sympathetic to the defense argument that the directors–who were not paid by WesCorp–never personally profited from the credit union's conduct.
Former WesCorp officers did not fare as well in this preliminary decision. Gross negligence charges against them also look to be dismissed due to a lack of basis in California law, but the judge appears willing to go forward with breach charges against most of the officers as well as issues surrounding payments to retirement plans.
Barring introduction of new arguments, indications are that Judge Wu will go forward with finalizing this preliminary decision in late January.
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