Administration March 4, 2007

Arthur Andersen Settles Pension-Led Suit for $65 Million

April 27, 2005 (PLANSPONSOR.com) - Arthur Andersen has paid $65 million to settle allegations that it should have found out about the massive fraud at WorldCom.

Reported by

Kip McDaniel

This brings the total settlement paid by investment banks, auditors and former board members of WorldCom to $6.13 billion, according to the Associated Press (See BoA Agrees to Settle WorldCom Suit Brought by Pension Funds ). The deal stopped a trial that had been going on for five weeks and which was about to go to a jury.

New York State Comptroller Alan Hevesi was the lead plaintiff in the massive class-action suit.

“We will have zero tolerance for the kind of behavior that was exposed at trial here and elsewhere regarding misbehavior on the part of corporate leaders,” Hevesi said, according to the AP. Hevesi and others had alleged that the accounting firm failed to help investors by missing the enormous fraud at WorldCom in 2000 and 2001, when it was the company’s independent auditor.

Andersen did not admit guilt with the settlement; in a statement released on Monday, the firm said it was settling to avoid the costs of litigation.

Hevesi disagreed with Andersen’s reasoning. “Their statements are blatantly false,” he was quoted as saying, listing other scandals the firm was involved in, which included Enron and Global Crossing.