WorldCom Stockholders Launch Class Action Against Arthur Andersen

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

01 April 2005

In opening statements on Tuesday, lawyers representing the lead plaintiff in a class action brought against former auditor, Arthur Andersen argued that the firm could have cut short the accounting fraud perpetrated at WorldCom.

Andersen is the only defendant not to have reached a settlement with WorldCom stockholders over its role in the collapse of the telecoms firm, which has re-emerged from Chapter 11 protection as MCI.

According to CNN, which reported on the lawsuit's launch this week, Sean Coffey (representing the New York State Common Retirement Fund) observed that:

"It was (the audit firm's) job to look under the hood, to check the tires and to tell investors that this car was safe to drive."

Instead, he argued, Arthur Andersen failed to ask the right questions, being more concerned with retaining WorldCom - which paid more than $40 million in audit and consultancy fees over a three year period - as a client.

However, in his opening statement on behalf of the auditor, Elliot Lauer suggested that the fraud was well concealed by top WorldCom executives, and told jurors that:

"You will see no evidence in this case that any of these accountants acted with anything other than good faith."

Recommended