U.S. Secretary of Labor Elaine L. Chao Announces Settlements for Global Crossing Retirement Plans

Archived News Release — Caution: Information may be out of date.

WASHINGTON —U.S. Secretary of Labor Elaine L. Chao today announced settlements with former directors and officers of Global Crossing stemming from the Department’s investigation of the Global Crossing Retirement Savings Plan. The 401(k) plan lost tens of millions of dollars as a result of its extensive stock holdings in Global Crossing stock, which lost virtually all of its value. The settlement covers the two former inside directors of Global Crossing, Thomas Casey (former Chief Executive Officer) and Gary Winnick (former Chairman of the Board), as well as the three former members of the Employee Benefits Committee, Dan J. Cohrs, Joseph Perrone, and John Comparin.

The Secretary entered into the agreements in connection with the proposed settlement of the private class action lawsuit brought on behalf of the participants of the plan. If the court approves the class-action settlement, the total recovery will be $79 million, including $25 million that Winnick placed in an irrevocable escrow account for the plan at the Secretary's behest, and an additional $54 million funded by defendants’ insurance policies in the private action.

“I am pleased that the Global Crossing workers, retirees and their families will receive a significant financial recovery,” said U.S. Secretary of Labor Elaine L. Chao. “Fiduciaries have a serious and significant responsibility to protect the long term pension security of their workers. I hope this lesson gets through to others.”

Under the terms of the new agreements, the former Global Crossing fiduciaries are prohibited from acting as fiduciaries to ERISA-covered benefit plans for five years unless they first notify the Department of Labor of their intention to serve as fiduciaries, and the Department agrees. The agreements are predicated upon approval of the class action settlement, and may be terminated by the Department if the class action settlement is not approved.

The settlement resulted from a comprehensive investigation conducted by the Los Angeles Regional Office of the Department’s Employee Benefits Security Administration and the Office of the Solicitor. It was coordinated through President Bush’s Corporate Fraud Task Force.

Archived News Release — Caution: Information may be out of date.