The suit, filed by Anthony Amodio against former WorldCom Chief Executive Bernie Ebbers and Citigroup chairman Sanford Weill, among others, asks for pain and suffering damages for leaving him penniless and ill with heart problems, according to an Associated Press report. The suit claims the defendants recklessly and intentionally inflated claims about the stock’s potential, making them millions of dollars while countless Americans lost money.
Amodio claims he was advised to keep his 23,820 shares of WorldCom stock amid claims that the share price would climb to $150, even when it was valued in April 2002 at a mere $7. Amodio’s lawyer, Ted Babbit, told the AP that his would be the first litigation to compel depositions from Ebbers, Weill and telecom analyst Jack Grubman.
“There isn’t any dispute that these people were
doing things to the detriment of their own clients, and
yet they walk away without one person being indicted,
without one criminal act being alleged, without one penny
in civil suits personally against them,” Babbitt said.
“They’ve gotten away with it so for. But this is going to
be the key that opens the door.”
Many investors burned by securities fraud have few options to recover their losses when a company such as WorldCom, which was brought down by an $11-billion accounting scandal, seeks bankruptcy protection. Shareholders have to sue or largely rely on regulatory fines for any recoveries. Also, shareholders are often kept away from the courthouse because investors usually sign waivers agreeing to arbitration to settle disputes.
Amodio claims he signed no waiver because his shares, acquired during his 26-year employment, were held in a Citigroup account.He had no account with Salomon Smith Barney, but Citigroup referred him to the firm for advice when he repeatedly called with concern about the stock’s plunging value.
‘Bitter Years’ Ahead?
“They painted such a picture to me to hold the
shares because I was going to make my fortune,” Amodio
told the AP. “I looked forward to the golden years and
now I look forward to the bitter years.”
He retired as a national account manager executive in 1997 after spending nearly three decades at MCI. He invested in the company’s stock and was required to trade it for shares in WorldCom when it purchased MCI, according to his suit.
He called Citigroup and Salomon as early as July 1999, when his shares would have been valued at $2.1 million, and said he was advised that Grubman predicted the stock to break triple digits by the year’s end.
Suing under Florida’s legal tort of “outrage,” his lawsuit could be the first to demand losses for emotional distress over a financial loss, according to legal experts.
Last April, Citigroup paid the highest penalty of any Wall Street firm – $400 million – to settle charges that its Smith Barney unit issued fraudulent and misleading research. Regulators also fined Grubman, and are investigating his former boss, Weill.