Mistrial Declared in AL WorldCom Bonds Trial

November 19, 2004 (PLANSPONSOR.com) - An Alabama judge decleared a mistrial after a jury deadlocked in the case brought by the state's pension fund against Bear Stearns alleging improper disclosure regarding WorldCom bonds.

The jury has informed Montgomery Circuit Judge Charles Price that is cannot reach a verdict. Price has set a retrial date for January 10. Jury foreman Brenna Ashford is quoted by the Associated Press (AP) as saying that the jury was split six to seven, with a thirteenth juror being allowed to deliberate as a result of an agreement between the two sides.

The case for the Alabama fund had seen some bumps in the past, with the state Supreme Court overruling Price regarding testimony of former WorldCom executives (See Alabama Supremes Rule Against RSA WorldCom Motion ).

In the case, the Retirement Systems of Alabama (RSA) alleges that it was sold WorldCom bonds in October 2001 by Bear Stearns, who it claims knew about financial concerns at the company but failed to disclose them during the sale. WorldCom filed for bankruptcy in July 2002, citing accounting irregularities that allowed the company to claim a profit while losing millions, according to the AP.

The RSA originally sued two WorldCom executives, four investment firms, and WorldCom accountant Arthur Anderson, asserting that the group has caused the fund to lose $124.7 million in value. Three of the securities firms and the accounting company settled with the fund for $111 million, but Bear Stearns refused to settle.

Bear Stearns lawyers claimed victory on Friday since the RSA could not pull out a win in its home town of Montgomery, according to the AP.

Similar suits have been filed by various state pension funds, including Maine (See Maine Retirement System Files WorldCom Suit ), 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 ), the state of Alaska (See Alaska Sues Finance Firms Over WorldCom Losses ) as well as pension systems in California, Illinois, and West Virginia.