Content area
Abstract
In January 2005, Corporate America took notice when the outside directors of the two companies most closely associated with corporate scandal - Enron and WorldCom - agreed to settle the securities class action cases involving those companies. The startling aspect of the settlements was that many of the directors agreed to contribute their personal funds, in excess of the contributions from their respective directors and officers insurance policies. As in all cases, these settlements do not constitute admissions of liability or wrongdoing by any of the settling directors. Moreover, as both cases are federal court class actions, the settlements are subject to court approval under Federal Rules of Civil Procedure Rule 23(e). This requirement already has proven significant: Judge Denise Cote promptly rejected an element of the proposed WorldCom settlement, leading to the settlement's termination by the lead plaintiff. Despite that reversal, the two settlements warrant the attention that they have received.