Last week’s earnings restatement by WorldCom has accelerated the plummet of the firm’s stock price and bond ratings, and in the process generated a number of participant-based lawsuits – even as the Clinton, Mississippi-based firm geared up to hand out some 17,000 pink slips.
On Thursday, Seattle-based Keller Rohrback L.L.P. filed a 401(k) breach of fiduciary duty class action against WorldCom on behalf of participants and beneficiaries of WorldCom’s 401(k) retirement plans from January 3, 2000, through the present. On Friday, New York-based Stull, Stull & Brody filed a similar action on behalf of what appears to be the same group of participants.
Keller Rohrback is currently pursuing 401(k) ERISA fraud allegations against Xerox, Tyco, CMS Energy, Duke Energy, Reliant Energy, and Halliburton, details of which can be found at the firm’s website, www.erisafraud.com .
At the same time, there is at least one suit, brought by
Klayman & Toskes P.A, against financial services firms
that allegedly failed to recommend hedging strategies to
participants in the employee stock option plan –
“strategies” that might have protected them from their
“concentrated position” in WorldCom, according to the suit
Option Participants Target WorldCom
). The participants apparently acquired that WorldCom
overexposure through the exercise of their stock options,
funded by their use of margin.
Klayman & Toskes, which announced the option-based suit more than a month ago, say they have, or are pursuing claims for, clients with recoverable damages – as it has for stock option plans at firms such as Lucent, Motorola, Nortel, Oracle, and Sun Microsystems. The firm, which focuses on securities arbitration and litigation matters, also has a web site, http://www.nasd-law.com/home.html .
The Stull suit, filed in the US District Court for the Southern District of Mississippi, alleges that WorldCom, its former chief executive officer Bernard J. Ebbers, its former chief financial officer Scott D. Sullivan, and other Plan fiduciaries breached their fiduciary duties under the Employment Retirement Income Security Act (ERISA) by, among other things, concealing from Plan participants and beneficiaries material information with respect to WorldCom’s business, financial results, and operations.
The Stull action specifically covers participants during the period in question under any of the following programs:
- The WorldCom, Inc. 401(k) Salary Savings Plan;
- The MCI Communications Corporation 401(k) Plan (formerly known as MCI Communications 401(k) Plan for Exempt Employees);
- The Western Union International, Inc. 401(k) Plan for Collectively Bargained Employees;
- The Skytel Communications, Inc. Employee Retirement Plan and Trust; and
- The IDB Communications Group, Inc. 401(k) Savings and Retirement Plan
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