New York State Comptroller Alan Hevesi, the lead plaintiff in the case, said Friday that the situation cost shareholders hundreds of millions of dollars, and he was “delighted to have achieved this marvelous recovery” for WorldCom investors.
The suit, tentatively settled in May (see Pension Funds Ordered to Take WorldCom Case to Federal Court ), was approved by Judge Denise Cote of United States District Court. At that time Cote tentatively approved the settlement by ordering Citigroup’s case severed from those of other defendants and by granting a three-week delay in pre-trial exchange of evidence. Settlement of the WorldCom litigation – which marks the end of litigation brought on behalf of WorldCom investors against Citigroup, applies to investors who acquired stock and bonds from April 29, 1999, to June 25, 2002.
Citigroup said it was unsure when the settlement would be paid out. Representatives for the company said that they are “pleased the settlement process took this important step toward conclusion” and would not elaborate.
Investors, who sought $54 billion in damages, accused Citigroup of hiding the company’s financial risks when it helped sell $10 billion of WorldCom debt in 2001. According to claimants, former Citigroup telecom analyst Jack Grubman promoted WorldCom stock until a few months before the company admitted to billions of dollars in accounting misdeeds.
WorldCom filed the largest corporate bankruptcy in U.S. history in July 2002. In April 2003, Grubman agreed to a lifetime ban from the securities industry and to pay a fine of $15 million.