WorldCom Inc. Case 04/30/2002
According to a press release dated September 29, 2006, for Movant GSC Parnters: Kenneth Pasquale Stroock & Stroock & Lavan LLP For Lead Plaintiff, Alan G. Hevesi: Max Berger John Coffey Steven Singer Bernstein Litowitz Berger & Grossman LLP Leonard Barrack Gerald Rodos Jeffrey Golan – GSC Partners ('GSC'), seeks court approval of its effort to revoke its prior request for exclusion from the class action brought against defendants related to WorldCom Inc. ('WorldCom'). Its application is denied as untimely. … GSC contends that the Court has 'inherent authority' in the management of this class action and should exercise equitable powers to grant GSC's application since that will avoid GSC having to consider whether to file its own indemnification action. For the reasons already explained, enforcement of the September 1, 2004 deadline is important. GSC itself relied on an opt-out deadline when it filed its request for exclusion. It would have been entirely justified in relying on that timely exclusion in filing its own separate litigation. Class members who hope to recover from the class action settlements and who saw the amount of recovery reduced by the volume of opt outs have a concommitant right to expect reasonable enforcement of the September 1, 2004 deadline for revocation.
In a press release dated May 31, 2006, the U.S. District Court for the Southern District of New York sustained an investment company's securities fraud claims against an investment advisor for allegedly making fraudulent and overly optimistic statements as to investments in WorldCom stock, ruling that a lack of evidence required more discovery. The district court dismissed the investor's state law and federal securities claims against WorldCom's auditors and individual WorldCom defendants, finding that the complaint failed to plead scienter. IQ Holdings, an investment group, purchased WorldCom on the day that WorldCom's financial and accounting fraud was announced. IQ alleged that Citigroup's affiliate, Salomon Smith Barney, knowingly made false statements as to the viability of investing in WorldCom stock prior to WorldCom's announcement, but on the same day the announcement was made. As part of a large securities fraud class action, IQ also sued WorldCom, Arthur Andersen and various WorldCom directors and officers for accounting fraud leading to the alleged Securities Exchange Act of 1934 § 10(b), Rule 10b-5 and § 20(a) securities fraud violations. To plead a § 10(b) and Rule 10b-5 claim, a claimant must show that the defendant knowingly made a material misrepresentation or omission in connection with the sale or purchase of a security, upon which the plaintiff relied, causing the plaintiff's loss.
In a press release dated October 28, 2005, nearly 70 pension funds and other large investors who lost money in the WorldCom scandal agreed to a $651 million settlement with the banks that sold them WorldCom bonds and stock, the investors' attorneys said Thursday. The settlement covers 32 lawsuits by insurance companies, investment funds and retirement funds -- including the California Public Employees' Retirement System (Calpers), the largest U.S. public pension fund -- that had bought billions of dollars in WorldCom securities from 1998 to 2001. Under the settlement, Citigroup and JPMorgan Chase -- two of the 14 banks sued -- agreed to petition the Securities and Exchange Commission for stronger disclosures by banks that underwrite stock and bond offerings. Investors want the banks and their corporate clients to more fully disclose their financial dealings with each other, including loans paid to bank officers and directors and allocations of initial public offering shares. Citigroup and JPMorgan Chase will cover most of the settlement. Lerach said that defunct accounting firm Arthur Andersen, which audited WorldCom's finances, will pay $8 million. Former WorldCom CEO Bernie Ebbers and former chief financial officer Scott Sullivan will pay "a modest amount" of insurance money, he said.
According to a press release dated September 22, 2005, a federal judge yesterday approved a $6.1 billion settlement to compensate investors in WorldCom, the telecommunications giant that collapsed in 2002 amid accounting fraud. Judge Denise Cote of Manhattan also ordered that about $347 million of that amount be paid to attorneys who brought class action lawsuits resolved in the settlement. Investors could see payments from the settlement within nine to 12 months, barring any appeals of yesterday's ruling, one of the lead attorneys for the class, Jeffrey Golan, of Philadelphia, said.
According to a press release dated August 2, 2005, a Notice of Proposed Settlements With Former WorldCom Executive Defendants was issued pursuant to the Court order. A hearing will be held on September 9, 2005, at 2:30 p.m., before the Honorable Denise Cote in the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, Courtroom 11-B, New York, New York 10007. At the Hearing, the Court will consider, among other matters: (i) the fairness, reasonableness and adequacy of the proposed settlements with the WorldCom Executive Defendants; and (ii) the fairness and reasonableness of the proposed Plans of Allocation for the settlements.
According to the Summary Notice of Proposed Settlements of Class Action With Settling Defendants and Bar Order Notice, released on July 8, 2005, ahearing will be held on September 9, 2005, at 2:30 p.m., before the Honorable Denise Cote in the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, Courtroom 11-B, New York, New York 10007. At the Hearing, the Court will consider, among other matters, (i) the fairness, reasonableness and adequacy of the proposed Settlements; (ii) the fairness and reasonableness of the proposed Plans of Allocation for the Settlements; (iii) the fairness and reasonableness of the proposed Supplemental Plan of Allocation for the distribution of all Settlement proceeds; (iv) the fairness and reasonableness of a proposed insurance-related coverage claim bar order; and (v) the fairness and reasonableness of Lead Counsel's application for attorney's fees and expenses.
The combined amount of the settlements with all of the Settling Defendants (the "Settlements") is $3,553,056,840. The total amount recovered for the benefit of the Class, including the Citigroup Settlement, is $6,128,056,840, plus interest.
According to a press release dated March 22, 2005, the last former WorldCom Inc. board member in a lawsuit brought by investors in the collapsed company agreed yesterday to pay $4.5 million out of his own pocket to settle the claim. The settlement reached brings $24.75 million in total that 12 former board members are paying personally to settle the class-action suit. Insurers for the 12 are kicking in an additional $36 million. If U.S. District Judge Denise Cote approves the former board members' settlement, Arthur Andersen would be left as the only defendant in the lawsuit. Jury selection was set for tomorrow.
According to a press release dated March 18, 2005, eleven of WorldCom Inc.'s former directors have agreed to pay $20.25 million of their own money as part of a $55.25 million settlement of a class-action lawsuit over bonds and securities issued by the telecommunications company, a lawyer for the lead plaintiff said late Friday. The settlement revives an earlier $54 million deal with 10 of the directors that collapsed last month. The directors will pay a portion of the settlement themselves and the rest -- about $35 million -- will be covered by insurance. There will be a hearing to grant preliminary approval of the directors' settlement on Monday.
According to a press release dated March 17, 2005, Utendahl Capital Partners, L.P. (UCP) announced that it has reached a settlement agreement in the WorldCom class action litigation. The terms of the agreement are confidential and subject to court approval.
According to a press release dated March 16, 2005, J.P. Morgan Chase & Co. agreed to pay $2 billion to end a class-action lawsuit by investors who lost money when telecommunications giant WorldCom went bankrupt in 2002. The bank's action came the day after a jury found former WorldCom chief executive Bernard Ebbers guilty of fraud in the world's largest accounting scandal. J.P. Morgan, the nation's second-largest bank, was a major underwriter of WorldCom bonds. With J.P. Morgan's agreement, total settlements in the case will come to $6 billion if approved by the courts, said state comptroller Alan Hevesi. A jury trial in the case is scheduled to begin next week for remaining defendants, including the accounting firm Arthur Andersen and a former WorldCom board member, Bert Roberts.
According to a press release dated March 10, 2005, Deutsche Bank announced it has reached a settlement agreement in the WorldCom class action litigation, which was brought on behalf of purchasers of WorldCom securities. Under the terms of the agreement, which is subject to court approval, Deutsche Bank will pay $325 million to the settlement class. Also, WestLB AG of Germany agreed to pay 75 million dollars and Caboto Holding SIM SpA of Italy agreed to pay 37.5 million dollars to settle the suit according to another press release on the same day.
According to a press release dated March 9, 2005, another four investment banks settled an investor lawsuit claiming they should have known about accounting problems at WorldCom Inc. when they sold the phone company's bonds. ABN Amro (ABN), BNP Paribas (BNPZY), Mitsubishi Securities and Mizuho International agreed to pay a total of $428 million to end the litigation, according to a statement issued by New York State Comptroller Alan Hevesi. ABN Amro will pay $278 million; Mitsubishi will pay $75 million; while BNP and Mizuho are coughing up $37.5 million each. Together, the four underwrote 12 percent of the bonds WorldCom sold in May 2001.
According to a press release dated March 5, 2005, four major investment banks that helped sell WorldCom bonds to the public two years before the company collapsed agreed yesterday to pay a little more than $100 million to settle with investors who lost money in the deals. Lehman Brothers, Credit Suisse First Boston, Goldman Sachs and UBS reached a proposed settlement with Alan G. Hevesi, the New York State comptroller and trustee of the state's Common Retirement Fund and lead plaintiff in the WorldCom securities class action. Lehman Brothers agreed to pay $62.7 million and the remaining banks will each pay approximately $12.5 million.
In a press release, dated March 3, 2005, Bank of America agrees to pay $460.5 million in settlement with investors who bought WorldCom's stock and bonds before company filed for bankruptcy in 2002. The deal was struck between Bank of America and Alan G. Hevesi, the comptroller of New York State and trustee of the state's Common Retirement Fund. Mr. Hevesi is the lead plaintiff in the securities class action representing investors who lost billions when WorldCom collapsed.
On February 3, 2004, the Second Circuit Court of Appeals directed the District Court to extend the deadline for those who wish to be excluded, however a new opt-out date has not yet been established. On October 24, 2003, Judge Cote issued an order certifying the class as all persons who purchased or otherwise acquired publicly traded securities of WorldCom during the period beginning April 29, 1999 through and including June 25, 2002. A Notice of Class Action was issued by the Court. This notice in part requires that anyone who wishes to be excluded from the class must file their request to be excluded by February 20, 2004.
On August 1, 2003, Plaintiffs filed the First Amended Complaint. On May 28, 2003, the Court issued and order consolidating the related actions for pre-trial purposes. On May 19, 2003, Judge Cote denied, in major part, the motions to dismiss the Complaint filed by the Salomon Defendants, the Director Defendants, the Underwriter Defendants and Bernard J. Ebbers.
According to a Press Release dated June 25, 2002, a new class action complaint will be filed in the securities litigation against WorldCom, Inc. to incorporate new allegations that WorldCom boosted its cash flow and profits over a five-quarter time period by wrongly booking billions of dollars in expenses as capital expenditures. Like the previous complaint filed on April 30, 2002, which was the first class action complaint to allege accounting fraud by WorldCom, the lawsuit will assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and the common law and seek to recover damages. The original complaint alleges that WorldCom misrepresented its earnings in its public filings with the SEC and elsewhere as a result of failing to record write-downs of goodwill and other intangible assets associated with WorldCom's acquisition of numerous telecommunications companies at premium prices. The complaint further alleges that WorldCom affirmatively misstated the value of goodwill and other intangible assets associated with WorldCom's acquisition of numerous telecommunications companies at premium prices and carried such assets on WorldCom's balance sheet at the cost of acquiring them long after it had become apparent that WorldCom had overpaid to acquire such assets. On June 25, 2002, CNBC reported that WorldCom's CFO Scott Sullivan has been ousted, and it now appears that WorldCom could be forced to restate earnings before interest, taxation, depreciation and amortization, or EBITDA, for the past five quarters. According to news accounts, WorldCom may have overstated its earnings by as much as $3.6 billion.