In the announcement, UC said it pursued a separate action in order to achieve a better result than what it would have in the WorldCom federal class action suit. Others, including New York City’s public pension funds (See NYC Public Pension Funds Reach Settlement in WorldCom Suit) and California’s large public pension funds (See CalPERS/CalSTRS Reach Settlement With WorldCom), also settled on separate actions for more than the federal suit would have awarded. Total recovery in the federal WorldCom class action was more than $6.13 billion (See Hevesi Settles with Last WorldCom Defendants).
UC filed its complaint in February 2003, against Salomon Smith Barney, Citigroup Inc. and Arthur Andersen LLP, accusing them of being involved in the financial collapse of WorldCom. UC’s complaint alleged that WorldCom, along with the defendants, engaged in a massive accounting fraud that inflated the price of its stock, damaging shareholders such as the university, the announcement said.
UC’s losses resulted from its purchase of 10.2 million shares of WorldCom and related securities acquired between 1998 and early 2000. Because the vast majority of these purchases occurred prior to the period of documented fraud at the company, most of the University’s losses did not fit within the claims asserted in the class action.
Arthur Anderson LLP remains a defendant in the UC case.
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