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| CONTACT: | Press
Office (518) 474-4015 |
FOR RELEASE: |
Immediately
January 7, 2005 |
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Ten of the former WorldCom outside directors sued in the WorldCom securities class action have agreed to pay a total of $18 million from their own pockets to settle the claims asserted against them in that action, Alan G. Hevesi, New York State Comptroller and sole Trustee of the New York State Common Retirement Fund and Court-appointed Lead Plaintiff, announced today. This is the first settlement in securities class action history in which an entire group of outside directors of a public company have themselves been required to pay to settle claims against them. In addition, the Settlement provides for an additional $36 million to be paid by the insurance companies that had written directors and officers liability coverage for WorldCom, for a total settlement of $54 million. Also, the directors have agreed to cooperate with the plaintiff in the continuing WorldCom lawsuit. “The fact that we have achieved a settlement in which these former outside directors have agreed to pay 20 percent of their cumulative personal net worth sends a strong message to the directors of every publicly traded company that they must be vigilant guardians for the shareholders they represent. We will hold them personally liable if they allow management of the companies on whose boards they sit to commit fraud,” Hevesi said. In addition to obtaining a significant portion of the available insurance coverage for the Class, the Settlement achieves a recovery from the settling directors in excess of their compensation as directors of WorldCom and in excess of 20 percent of the settling directors' cumulative net worth, not including primary residences, retirement accounts and other judgement proof assets. This settlement was arrived at after extensive negotiation between the parties under the supervision of United States Magistrate Judge Michael H. Dolinger. “We thank Magistrate Judge Michael H. Dolinger of the U.S. District Court for the Southern District of New York in particular for his tireless efforts to bring all the parties to an agreement,” Hevesi said. Hevesi is the Court-appointed Lead Plaintiff in the consolidated securities class action, In re WorldCom, Inc. Securities Litigation, which is pending before Judge Denise Cote in federal court in Manhattan. The settlement resolves all claims asserted in the WorldCom securities class action against former directors James C. Allen, Judith Areen, Carl J. Aycock, Max E. Bobbitt, Clifford L. Alexander, Jr., Stiles A. Kellett, Jr., Gordon S. Macklin, John A. Porter, the Estate of John W. Sidgmore, and Lawrence C. Tucker. All served on WorldCom’s board of directors at various times between April 29, 1999 and June 25, 2002, the period during which WorldCom allegedly issued false and misleading statements to the investing public. The claims fall into two categories: claims arising from WorldCom’s public bond offerings in 2000 and 2001, and claims arising out of the purchase of publicly-traded WorldCom securities in the open market between April 29, 1999 and June 25, 2002 (the “Class Period”). This is the second settlement reached in the WorldCom securities class action. The first was with the Citigroup Defendants, for the sum of $2.575 billion, which represented the largest amount ever recovered in a securities class action from a party other than the company that issued the subject securities. That settlement was approved by United States District Court Judge Denise Cote on November 12, 2004. Hevesi continued: “We are also vigorously continuing to pursue our claims against the others who bear responsibility for the debacle at WorldCom, including the remaining 17 underwriters, WorldCom’s auditor, Arthur Andersen, and the remaining directors of WorldCom, and look forward to the start of trial against those defendants on February 28, 2005.” The NYSCRF and investor class are represented by the law firms of Barrack, Rodos & Bacine and Bernstein Litowitz Berger & Grossmann LLP, who were appointed as Lead Counsel by Judge Cote in August 2002. In connection with the Court's approval of the Citigroup Settlement, proof of claim forms have previously been sent to members of the Class. Comptroller Hevesi encourages all Class members to submit their claim forms by March 4, 2005 — the Court-ordered deadline for submission of claim forms. To obtain further information concerning that Settlement and the submission of proof of claim forms, investors may access the website maintained by Lead Counsel, at www.worldcomlitigation.com. ### Albany Phone: (518) 474-4015 Fax:(518)
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