Investment Firms Sued By State Of Alaska Over WorldCom Losses

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

24 April 2003

It emerged on Tuesday that the state of Alaska has filed a lawsuit against several major financial institutions, which it claims violated federal law by participating in the issuance of false or misleading documents related to the sale of WorldCom bonds.

According to a statement released by state Attorney General, Gregg Renkes earlier this week, state funds, including Alaska pension funds and the constitutional budget reserve, lost approximately $26 million when the serious business problems confronting the telecommunications company became known.

In their lawsuit, filed in the Juneau Superior Court earlier this week, the state authorities allege that several leading financial institutions failed to report accurately on WorldCom's financial situation, leaving many individual, institutional, and pension fund investors seriously out of pocket.

Defendants named in the lawsuit are: Citigroup Inc., Salomon Smith Barney Inc., J.P. Morgan Securities, Inc., Bank of America Corp., Banc of America Securities LLC, ABN AMRO Inc., Deutsche Bank AG, Deutsche Banc Alex. Brown Inc., Lehman Brothers Holdings, Inc., Lehman Brothers Inc., Credit Suisse Group, Credit Suisse First Boston Corp., Goldman Sachs Group, Inc., Goldman Sachs & Co., UBS Warburg LLC, Nationsbanc Montgomery Securities LLC, and Arthur Anderson LLP.

'These defendants failed to meet their obligation to fully inform potential bond holders about WorldCom's true financial condition,' the Alaskan AG announced, continuing: 'We hope to restore money to the State of Alaska's funds and send Wall Street a message that we will hold them accountable if they abandon honesty for profits.'

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