Charges Against Outside Directors Re-Opened in NCUA v Siravo, et. al
In a complicated ruling Monday, Judge George Wu opened a door that had seemed closed by agreeing to allow cases against WesCorp outside directors to proceed. That decision is a reversal of a draft ruling circulated by the judge in late December, in which Judge Wu proposed dismissing all charges against the WesCorp outside directors.
NCUA had filed in opposition to that draft ruling, offering detailed argument that the outside directors in fact had culpability in the losses incurred by WesCorp.
In yesterday's ruling, the judge concluded that "the end result might very well be the same" after "a new round of motion to dismiss briefing"--that is, the charges may still be dismissed after NCUA amends its filings. But, for now, and despite signaling skepticism that the NCUA argument will prevail, Judge Wu agreed the defendants will get the day in court that the plaintiff has asked for.
At least some credit union leaders applaud the judge's decision. Stuart Perlitsh, CEO of Glendale Area Schools Federal Credit Union, said, "The defendants need to have their day in court, that's what transparency is about." Perlitsh's credit union was in the original group of seven that filed against WesCorp, a case in which NCUA eventually intervened. Perlitsh added, "This case should proceed if only to put all directors on notice."