November 5, 2004
Comptroller Hevesi Announces Final District Court Approval of $2.575 Billion Partial Settlement in WorldCom Securities Law Class Action
A federal judge granted final approval of the landmark $2.575 billion settlement reached with Citigroup and its affiliates in the WorldCom, Inc. Securities Litigation class action, New York State Comptroller Alan G. Hevesi, the lead plaintiff in the case, announced today.
“The WorldCom situation cost shareholders hundreds of millions of dollars. As lead plaintiff for this case, I am delighted to have achieved this marvelous recovery for the Class,” Hevesi said following the ruling Friday by Judge Denise Cote, United States District Judge for the Southern District of New York. “As for the remaining defendants, I intend to continue to vigorously pursue litigation. Meanwhile we urge all Class members to submit the claim forms necessary for you to participate in the distribution of this settlement fund.”
As lead plaintiff, Hevesi represents the entire Class, which consists of all persons who purchased stock and publicly-traded bonds of WorldCom during the period from April 29, 1999 through and including June 25, 2002, and who were injured as a result of their WorldCom transactions.
In issuing the ruling, Judge Cote said that the settlement was “historic.”
The settlement with Citigroup, originally announced in May 2004 and preliminarily approved by Judge Cote in July 2004, was subject to final approval by the Court after members of the Class were given an opportunity to review the settlement and voice any concerns they may have had about it to Judge Cote. More than four million notices were mailed to Class members, but less than 10 objections were received. Judge Cote found no merit in any of the objections.
Comptroller Hevesi also noted that Judge Cote approved the proposed plan for allocating the Settlement Amount between WorldCom bond and stock purchasers, and that the prosecution of investors’ claims continues against all defendants with whom settlements have not been reached.
The remaining defendants include seventeen other banks that helped underwrite two mammoth bond offerings for WorldCom in 2000 and 2001, as well as WorldCom’s former auditor Arthur Andersen and former outside directors of WorldCom. Trial against those other defendants is scheduled to begin before Judge Cote on February 28, 2005.
Approval of this Settlement marks the end of litigation brought on behalf of the Class against Citigroup and certain of its affiliated entities, including former telecommunications analyst Jack Grubman. Based on the final negotiations between Lead Plaintiff and the Citigroup Defendants, the amount that Citigroup will pay in the Settlement is $2.575 billion, plus interest, which began to accrue on September 3, 2004. The original settlement amount of $2.65 billion was subject to adjustment pursuant to a previously-negotiated formula that took into account the number of prospective Class members who elected to opt out of the Class.
Anyone with questions concerning the Settlement or the submission of claim forms may access the website being maintained for the case, www.worldcomlitigation.com, or contact the attorneys for the Comptroller -- Barrack, Rodos & Bacine, 3300 Two Commerce Square, 2001 Market Street, Philadelphia, PA 19103, (215) 963-0600, www.barrack.com; and Bernstein Litowitz Berger & Grossmann LLP, 1285 Avenue of the Americas, New York, NY 10019, (212) 554-1400, www.blbglaw.com, -- who are serving as Co-Lead Counsel for the Class.