Court rules on Worldcom directors

USA Today reported last Wednesday that a federal judge threw out a key part of the $US54 million settlement by 10 former WorldCom directors, scuttling a deal to compensate investors who lost billions of dollars as a result of the company’s accounting fraud.

US District Judge Denise Cotes indicated that the settlement, which had called for the directors to contribute $US18 million of their own money, might hobble future efforts to collect payments from other defendants.

According to USA Today, the settlement – while not particularly large in the context of WorldCom’s $11 billion fraud – was considered ground-breaking because it sought to force WorldCom’s outside directors to take personal responsibility for their roles in WorldCom’s implosion.

As a result of the court’s action, the lawsuit is expected to proceed to trial on February 28.