Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

News Now

CU System
WesCorp officers offer arguments in NCUA case
LOS ANGELES (9/2/11)--Officers of the defunct Western Corporate FCU who were sued by the National Credit Union Administration (NCUA) after the corporate's collapse have filed counterclaims to NCUA's allegations in the U.S. District Court in Los Angeles. They allege that NCUA was aware of WesCorp's investment strategies and approved them. NCUA, in its role as WesCorp's conservator, sued the officers and directors alleging breach of fiduciary duty and fraud related to investments that caused losses at the corporate during the nation's financial crisis. The court in July dismissed the case against WesCorp's former directors but denied the officers' request to dismiss separate charges against them. The counter claim documents were filed separately Aug. 15-16 by attorneys for Robert A. Siravo, former president/CEO of WesCorp; Todd M. Lane, former chief financial officer; Robert J. Burrell, executive vice president; Timothy T. Sidley, former vice president for risk assessment and chief risk officer; and Thomas E. Swedberg, former vice president. The officers' counterclaim documents say that NCUA knew, approved of and encouraged WesCorp's investment strategies and had direct oversight and supervision of WesCorp. For example, Burrell's counterclaims allege that NCUA and WesCorp's members knew, approved of and encouraged WesCorp's investment strategy. NCUA's Office of Corporate Credit Unions monitored the corporate daily, with on-site examiners, annual exams, and a full-time capital market specialist was located at WesCorp's facilities. The documents said NCUA was critical of WesCorp's prior and so-called conservative management, disapproved of that management, suggested or required that WesCorp's board hire new management and approved of…the hiring of the new management. According to court documents, the officers claim that NCUA:
* Gave WesCorp special permission to buy riskier investments than WesCorp ever bought and far riskier investments than those that the agency has attacked in its lawsuit; * Gave WesCorp authority to invest in securities rated as low as BBB; * Approved of WesCorp's investment in Option ARM mortgage-back securities (MBS), lower tranche MBS and reduced documentation MBS; * Approved of WesCorp's investment-related policies and procedures; * Knew that the ratings agencies also praised WesCorp's investments; and * Publicly stated that AA and AAA-rated private label MBS were appropriate investments and nearly as safe as agency MBS.
In addition to the allegations, each defendant is seeking reimbursement for legal expenses incurred in the case. U.S. District Judge George Wu set several dates for the case to proceed, including a post-mediation status conference on March 1, 2012. If the case proceeds according to schedule, a pretrial conference could be heard as early as Sept. 20, 2012.


RSS





print
News Now LiveWire
Maine credit unions put Food Mobile on the road to relieving hunger in rural areas http://t.co/R0xpt6BAZE
1 Day ago
.@TheNCUA's Matz: PALS should be exempt from Military Lending Act proposal #NewsNow http://t.co/Vy9uNhOIEr
1 Day ago
#NewsNow Iowa loan growth 3 times national bank rate http://t.co/fUvudPLg5d
1 Day ago
.@ICBA tallies its Home Depot data breach costs: $90M, 7.5M cards http://t.co/iJgRDC2AKZ
1 Day ago
.@icul's Jury elected treasurer of @WOCCU exec committee http://t.co/HEF1UChN8f
1 Day ago