Alaska Sues Finance Firms Over WorldCom Losses

April 23, 2003 (PLANSPONSOR.com) - The state of Alaska has filed a lawsuit against several major financial institutions to recover money lost in bonds issued by bankrupt WorldCom.

The lawsuit, filed in state Superior Court in Juneau, alleges that the financial institutions misled state officials about the WorldCom investments leading to losses by state pension funds and the constitutional budget reserve of approximately $26 million when the value of WorldCom bonds collapsed, according to a news release.  

Named as defendants in the lawsuit were:

  • Citigroup Inc
  • Salomon Smith Barney Inc
  • JP Morgan Securities Inc
  • Bank of America Corp
  • ABN AMRO Inc
  • Deutsche Bank AG
  • Lehman Brothers Inc
  • Credit Suisse Group
  • Goldman Sachs Group Inc
  • USB Warburg
  • Nationsbanc Montgomery Securities
  • Arthur Andersen LLP

“These defendants failed to meet their obligation to fully inform potential bond holders about WorldCom’s true financial condition,” state Attorney General Gregg Renkes said in the release. “We hope to restore money to the State of Alaska’s funds and send Wall Street a message that we will hold them accountable if they abandon honesty for profits.”    San Diego law firm Milberg Weiss Bershad Hynes & Lerach LLP, which specializes in securities matters, was retained by the state to handle the litigation .

Similar suits have been filed in recent months by various state pension funds due to losses suffered in WorldCom investments.    Among them The Board of Trustees of the Tennessee Consolidated Retirement System (TCRS)(See  Tennessee Fund Files WorldCom Suit ), the University of California  (See UC Seeks Home Court Advantage in WorldCom Suit ), the state of Ohio (See  Ohio Will Stay Close to Home With Enron, WorldCom Claims ), as well as pension systems in California, Illinois, West Virginia, and Alabama.

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