According to an Associated Press report, the most recent lawsuit claims misleading advice from 14 named WorldCom executives, their banks and underwriters led the State Investment Council, the Educational Retirement Board and the Public Employees Retirement Association to lose more than $40 million in bonds and a similar amount in WorldCom stock.
More than 12 other states plan to file similar lawsuits against WorldCom, which renamed itself MCI in the aftermath of a massive accounting fraud exposed last summer, according to the AP report.
As for New Mexico’s latest lawsuit, Assistant Attorney General Zachary Shandler described it as more aggressive. He said it has a better chance of recovering more money than the previous two that were filed in federal court in New York.
The attorney general’s office has submitted proof of claims for the three state agencies in the federal bankruptcy court where WorldCom filed for bankruptcy protection in 2002. New Mexico officials expect the WorldCom executives named in the latest suit to seek mediation. If that happens, the case would be moved to federal court in New York. If it isn’t resolved through mediation, Shandler said the case would be sent back to district court in Santa Fe.
The company took a step toward clearing its financial name Monday as a bankruptcy court opened hearings on a plan to erase most of the long-distance carrier’s $41-billion debt.