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The LA Times reports that a group of Wall Street banks has challenged the settlement announced last week between 10 former WorldCom directors and plaintiffs. The 16 banks were among the underwriters of WorldCom securities and are also defendants in the lawsuit, which is scheduled to go to trial on February 28th.

In a letter to U.S. District Judge Denise Cote, the banks argued that the settlement with the former directors was inappropriate, among other reasons, because it was reached too close to the scheduled trial date, could leave the remaining defendants to shoulder too much liability and could be scuttled by the insurance companies, which under certain circumstances could back out of the agreement.

In a brief hearing yesterday, the Judge declined to grant a request by plaintiffs that the 10 former directors be immediately excused from the case. Instead, she asked both sides to quickly submit briefs further detailing their arguments. She said the trial would begin as scheduled, whether the 10 former directors have been excused from the case at that point or not.

For more analysis on what the WorldCom settlement means for directors’ liability, read this interview with Andy Edison on the WorldCom Litigation Settlement.

Tomorrow’s CompensationStandards.com Webcast

It truly has been a madhouse as many folks have been signing up at the last minute for tomorrow’s webcast: “What NOW Needs to Be Disclosed in the Proxy Statement.” Don’t forget that the webcast is earlier than our typical webcasts – at noon eastern on Thursday – and the audio archive will be available soon after its complete in case you missed it live.

Our HQ has been swamped with so many requests that now, in order to ensure access, you are advised to sign up directly online.

And, to avoid user ID and password hassles, you can take advantage of the simple “Firmwide Rate” of $1995, by which everyone in your company or firm can access all the resources on the website (with exception of 10/20 conference archives which now only costs $95 per person). And all the 2005 rates for CompensationStandards.com entitle subscribers to 50% off for the 2005 compensation conference to be held in the Fall, either live or by video webcast.

Class Action Securities Fraud Lawsuits up in 2004

According to a report released last week by the Stanford Law School Securities Class Action Clearinghouse (in cooperation with Cornerstone Research), the number of federal securities fraud class actions filed in 2004 increased only moderately from 2003 levels, rising to 212 companies sued from 181 – but the decline in stock market capitalization corresponding to these actions increased dramatically.

The number of lawsuits alleging violations of GAAP remained relatively constant in 2004, declining to 102 (48%) in 2004 from 107 (59%) in 2003. Further, several of the large dollar losses observed this year arose as a consequence of product market developments that had material adverse stock market price effects.

The report found that the most active federal circuits as measured by the number of issuers sued in 2004 were: the Ninth Circuit (including California) with 64 filings, an 83 percent increase over 2003; the Second Circuit (including New York) with 45 filings; and the Eleventh Circuit (Alabama, Florida, and Georgia) with 20 filings.

Pension Reform On the Way

On Monday, Dept. of Labor Secretary Chao announced the administration’s plan to reform funding requirements for private, single employer defined benefit pension plans and to raise the premiums paid to the Pension Benefit Guaranty Corporation. Here is the DOL press release – and a fact sheet put out by the DOL.

The following outlines the Administration’s plan in general terms: It is based on three main principles: (1)Reforming the funding rules for private defined benefit pension plans to ensure that employers fully fund their retirement promises. (2) Reforming the premiums that private defined benefit plans pay to the federal insurance program to better reflect the real risks and costs. (3) Increasing the disclosure of information about private defined benefit pension plans to workers, investors and regulators to ensure greater transparency and accountability.

Some of the proposed changes are:

– Companies would be required to make up funding shortfalls within a reasonable period, e.g., 7 years.

– Pension liabilities would be determined using corporate bond rates, based on using bond durations that match the schedule of when pension benefits are to be paid.

– Premiums to the PBGC would initially be increased to $30 per worker from the current $19 and be indexed into the future, for flat rate premiums.

– Underfunded plans would pay risk-based premiums based on plan underfunding.