Deals for $460M from Bank of America, $100M from 4 Underwriters Reached in Worldcom Case

March 7, 2005

Four investment banking firms that participated as underwriters in WorldCom’s May 2000 bond offering have agreed to pay a total of $100.3 million to settle the claims asserted against them in the WorldCom securities litigation.

The four investment banks are: Lehman Brothers Inc. (paying $62,713,582); Credit Suisse First Boston, LP (paying $12,542,716); Goldman, Sachs & Co. (paying $12,542,716); and UBS Warburg LLC (paying $12,542,716). Together, they underwrote 12% of the bonds issued in WorldCom’s May 2000 offering. They did not participate in the May 2001 bond offering and, thus, there were no claims asserted against these firms based on that offering.

As with the $460.5 million settlement with Bank of America announced previously, the amount that these firms are paying is based on the same formula under which the Citigroup defendants settled the bond portions of the claims against them in May 2004, even though these entities were not lead underwriters for the May 2000 offering.

The deals were announced by the lead plaintiff, Alan G. Hevesi, New York state comptroller and sole trustee of the New York State Common Retirement Fund.

“We commend these four investment banks for putting this issue behind them. While we are willing to talk with other defendants about potential settlements, we are looking forward to the start of trial against any remaining defendants on March 17, 2005,” Hevesi said.

Hevesi is the court-appointed lead plaintiff in the consolidated securities class action, In re WorldCom, Inc. Securities Litigation, which is pending before Judge Denise Cote in federal court in Manhattan.

This settlement follows the $460.5 million settlement with Bank of America, and the $2.575 billion settlement with the Citigroup defendants, which was approved by United States District Court Judge Denise Cote on November 12, 2004. If the Bank of America settlement and the present settlement are approved, this wiould bring the total recovery to date to $3,135,500,000.

These recent deals still leave as many as 10 defendants involved in the litigation, including J. P. Morgan Chase, Deutsche Bank and Arthur Andersen, along with former Worldcom directors.

Jury selection in the trial is scheduled to begin next week.

The NYSCRF and investor class are represented by the law firms of Barrack, Rodos & Bacine and Bernstein Litowitz Berger & Grossmann LLP.

Was this article valuable?

Here are more articles you may enjoy.