Global Crossing settlement called wrist slap as case ends.The Securities and Exchange Commission's settlement last week with Global Crossing Ltd. and three of its executives puts an end to a three-year investigation into the conduct of those running the company, which went bankrupt in 2002. Global Crossing executives, led by founder Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. financier Gary Winnick Gary Winnick was a founder of Global Crossing Limited, a telecommunications company providing worldwide computer networking services. He was CEO from the company's inception, 1997, until 2002. , sold billions of dollars of stock before some $40 billion in shareholder equity evaporated. Later, allegations emerged of reciprocal transactions that made the Beverly Hills-based firm appear to be healthier than it was. No fraud charges were ever filed against Winnick or any other Global Crossing insiders, and none has admitted to any wrongdoing wrong·do·er n. One who does wrong, especially morally or ethically. wrong  do . In last week's settlement, former Global Crossing Chief Executive Thomas Casey Thomas Casey may refer to:
The company and the executives also agreed not to violate certain federal securities laws in the future. "The combination of not being required to admit wrongdoing and a mere $100,000 fine when there was clear and determined violations of fiduciary duty Noun 1. fiduciary duty - the legal duty of a fiduciary to act in the best interests of the beneficiary legal duty - acts which the law requires be done or forborne and breach of trust was a nominal penalty," Los Angeles-based attorney Lance Kimmel told Minnesota Public Radio's "Marketplace" last week. Global Crossing emerged from bankruptcy in December 2003, after washing itself of some $12 billion in debt, including $116 million lost from the company's 401(k) plans that covered 20,000 current and former employees. Legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. are still under way against former auditor Arthur Andersen For the U.S. Supreme Court case commonly known as Arthur Andersen, see . Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms (the other four are PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG), performing LLP--which itself collapsed--as well as advisors J.P. Morgan Chase & Co., Goldman Sachs Group Inc., Merrill Lynch & Co. and four other banks for underwriting or issuing fair-value opinions about the company's stock while allegedly misrepresenting its finances. Winnick escaped penalty in December 2004, when the SEC dropped all charges against him. He pocketed an estimated $860 million through sales of Global Crossing stock before capacity swaps that allegedly inflated revenue were disclosed to investors. He agreed to pay $55 million to settle employee pension fund and shareholder complaints. Global Crossing, now based in Florham Park, N.J., ran up $12.4 billion in debt building a 100,000-mile fiber-optic network. The so-called reciprocal transactions entailed selling capacity to other carriers while at the same time purchasing capacity from the same carriers. Shareholder Return As Global Crossing's lawyers went to bankruptcy court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. , insiders got off with relatively light payments. Citigroup Inc.: Salomon Smith Barney unit agreed to pay $75 million to settle shareholder litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . Star analyst Jack Grubman was a major fan of Global Crossing. Qwest Communications: A partner in Global Crossing's questionable swaps, Qwest paid $250 million to settle SEC fraud charges, without admitting or denying wrongdoing. Gary Winnick: Testifying before Congress in 2002, he volunteered to pay $25 million to employee retirement funds, and paid another $30 million to settle lawsuits filed by employees and shareholders. Insurers: Pender Insurance Ltd., Chubb Insurance Group and American International Group
American International Group, Inc. (AIG) (NYSE: AIG; TYO: 8685 ) is a major American insurance corporation based in New York City. , providers of Global Crossing's directors' and officers' insurance, paid $250 million in March 2004 to settle the bulk of litigation brought by employees. Lawyers: Global Crossing's outside law firm, Simpson Thatcher Thatch·er , Margaret Hilda. Baroness. Born 1925. British Conservative politician who served as prime minister (1979-1990). Her administration was marked by anti-inflationary measures, a brief war in the Falkland Islands (1982), and the passage of a & Bartlett, agreed to pay $19.5 million to settle securities fraud claims. Lead plaintiffs were the Public Employee's Retirement System of Ohio and the State Teachers' Retirement System of Ohio. Others: Covered by insurance were former General Counsel, Jim Gorton, now a partner at Latham & Watkins; David Lee, co-founder and now a managing director of Clarity Partners LP in Beverly Hills; and co-Chairman Lodwrick Cook, the former Atlantic Richfield chairman who worked for Winnick's investment firm, Pacific Capital Group Inc. |
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