Institutional Investors Settle WorldCom Lawsuits

by Glen Shapiro, LawAndTax-News.com, New York

28 October 2005

It was announced yesterday that a group of institutional investors which opted out of an earlier settlement regarding the collapse of telecoms firm WorldCom (now MCI) have now reached a settlement agreement with the company's former investment banks.

Lerach Coughlin Stoia Geller Rudman & Robbins LLP, the law firm representing the investors yesterday announced that it had recovered more than $651 million in the individual non-class action lawsuits arising out of the financial collapse of WorldCom Inc., to compensate them for losses on purchases of WorldCom bonds and stock during 1998-2001.

“These recoveries are unprecedented,” observed William S. Lerach, adding that:

“Our clients’ net recoveries on their WorldCom bond losses are substantially higher than the estimated recovery for the same bond losses in the WorldCom class action. Our clients are also recovering millions of dollars for December 2000 bond offering claims the class action did not pursue. They will also get a higher recovery than what class members are estimated to receive for their WorldCom stock losses.”

The defendants in the suits were CitiGroup, J.P. Morgan, Deutsche Bank, Tokyo-Mitsubishi, ABN AMRO, WestLandes, BNP Paribas, Caboto, Mizuho, Bank of America, CSFB, Lehman, Goldman Sachs, UBS Warburg, Arthur Andersen and certain WorldCom officers and directors.

CitiGroup and J.P. Morgan have agreed, as part of the settlement, to petition the Securities and Exchange Commission jointly with some of the plaintiffs to issue rules requiring increased disclosures in future securities offerings, including more information about loans to issuers and the issuers’ officers, increased information regarding allocation of IPO shares to the issuers’ insiders, and more information about the research coverage underwriters will provide about issuers.

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