Banks in WorldCom Settlement
Citigroup Inc., JPMorgan Chase & Co. and 12 other banks will pay $639 million to settle claims that they should have uncovered WorldCom Inc.’s accounting fraud before selling its bonds, investors’ lawyers said Thursday.
The settlement with 65 retirement funds is separate from the $6.1 billion that the same WorldCom underwriters and former directors have agreed to pay since May 2004 to resolve a class-action lawsuit. Pension funds, including the California Public Employees’ Retirement System, opted out of the broader fraud case to press claims individually.
Investors say that WorldCom artificially reduced expenses in 2001 and 2002 to meet Wall Street expectations. The plaintiffs said banks and Arthur Andersen signed off on the fraud by underwriting securities and certifying the company’s finances.
WorldCom emerged from bankruptcy protection as MCI Inc. and moved to Ashburn, Va. New York-based Verizon Communications Inc. is buying MCI.
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