|
SETTLEMENTS
On July 26, 2005, New York State Comptroller Alan G. Hevesi, the Lead Plaintiff in the WorldCom Securities Class Action Litigation, announced that settlements had been reached with former WorldCom executives Scott Sullivan, David Myers, and Buford Yates. With these three settlements, each of the defendants in the WorldCom Securities Class Action has settled with Comptroller Hevesi. Taken with the anticipated proceeds from the Sullivan settlement, the total recovery obtained for the WorldCom investor class exceeds $6.136 billion, with $18 million to $28 million in additional money expected to be recovered from the sale of assets covered by the June 30, 2005 settlement with former WorldCom CEO Bernard Ebbers. On April 25, 2005, after four weeks of trial and two days before closing arguments were scheduled before Judge Denise Cote, Arthur Andersen LLP, the final defendant in the WorldCom securities class action, has agreed to settle for $65 million in cash. Those funds have already been transferred to an escrow account. Previously, on March 21, 2005, former WorldCom Chairman Bert Roberts, the 12th and final director defendant in the WorldCom securities class action, has agreed to pay a total of $4.5 million from his own pocket to settle the claims against him in this action. On March 18, 2005, 11 other former WorldCom director defendants agreed to pay a total of $20.25 million from their own pockets to settle the claims asserted against them. The insurance companies that had written directors and officers liability coverage for WorldCom will pay an additional $1 million to settle the claims against Roberts and an additional $35 million to settle the claims against the other former directors. The Director settlements followed the $460.5 million settlement with Bank of America announced on March 3; the $100.3 million settlement with Lehman Brothers, Goldman Sachs, Credit Suisse First Boston, and UBS Warburg announced on March 4; the $428.4 million in settlements with ABN AMRO, Mitsubishi Securities International, BNP Paribas Securities Corp. and Mizuho International announced on March 9; and the $112.5 million in settlements with WestLB and Cabato Holding announced on March 10; the $325 million settlement with Deutsche Bank announced on March 10; the $572,840 settlement with Blaylock & Partners, L.P. and the $234,000 settlement with Utendahl Capital Partners, L.P. announced on March 16; the $2 billion settlement with J. P. Morgan Securities and certain of its affiliates announced on March 16 and the $2.575 billion settlement with the Citigroup Defendants, which was approved by District Judge Denise Cote in November 2004.
Attachments: > 07/29/05 - Notice of Proposed Settlements of Class Action With Former WorldCom Executive Defendants > 07/29/05 - Notice of Proposed Settlements of Class Action With Former WorldCom Executive Defendants ("Blacklined" Draft Marked to Reflect Proposed Revisions of the Court Provided on July 29, 2005) Attachments: > 07/28/05 - Notice of Proposed Settlements of Class Action With Former WorldCom Executive Defendants > 07/28/05 - Notice of Proposed Settlements of Class Action With Former WorldCom Executive Defendants ("Blacklined" Draft Marked to Reflect Proposed Revisions Court Provided in July 28, 2005 Order) Attachments: > 07/27/05 - [Proposed] Preliminary Approval Order Regarding Settlement with Buford Yates and David Myers (with revisions to July 26, 2005 version) > 07/27/05 - [Proposed] Preliminary Approval Order Regarding Settlement with Scott D. Sullivan (with revisions to July 26, 2005 version) > 07/27/05 - Notice of Proposed Settlements of Class Action With Former WorldCom Executive Defendants > 07/27/05 - Notice of Proposed Settlements of Class Action With Former WorldCom Executive Defendants ("Blacklined" Draft Marked to Reflect Proposed Revisions Court Provided in July 27, 2005 Order) > 07/27/05 - Email Correspondence Apparently Intended for Court Which Sent to the United States Attorney's Office and Forwarded to Lead Plaintiff Attachments: > 07/26/05 - Stipulation of Settlement with Scott D. Sullivan > 07/26/05 - Stipulation of Settlement with Buford Yates and David Myers > 07/26/05 - Notice of Proposed Settlements of Class Action With Former WorldCom Executive Defendants Attachments: > 07/06/05 - Stipulation of Settlement with Bernard J. Ebbers > 07/06/05 - [Proposed] Judgment Approving Settlement and Dismissing Action Against Bernard Ebbers > 07/06/05 - [Proposed] Order for Preliminary Approval Regarding Settlement with Bernard J. Ebbers
CITIGROUP SETTLES FOR $2.65 BILLIONOn May 10, 2004, Alan G. Hevesi, the Comptroller of the State of New York, in his capacity as sole Trustee of the New York State Common Retirement Fund and the Court-appointed Lead Plaintiff in the WorldCom Securities Class Action Litigation, announced a $2.65 billion settlement with the Citigroup, Inc., Citigroup Global Markets, Inc. (formerly known as Salomon Smith Barney, Inc.), Citigroup Global Markets Limited (formerly known as Salomon Brothers International Limited), and former securities analyst Jack Grubman. The settlement resolves all claims of the Lead Plaintiff and the Class against the Citigroup Defendants. District Judge Denise L. Cote granted final approval of the settlement on November 5, 2004. Judge Cote granted preliminary approval of the settlement on July 16, 2004. Click here to view Judge Cote's July 16, 2004 order. The Court-approved Notice of the Settlement was mailed to Class Members beginning on August 2, 2004. A Proof of Claim and Release form will accompany each Notice. The Court has established March 4, 2005 as the date by which Class Members must submit their Proof of Claim forms. Copies of the Notice and Proof of Claim form are posted on this website, and can be accessed by clicking here. Click here for details on contacting the claims administrator and the answers to many frequently asked questions on the Citigroup settlement. The Class was certified on October 24, 2003, by Judge Cote, leading to a Notice that was sent to Class members on and after December 11, 2003. On August 15, 2002, the Comptroller was appointed as Lead Plaintiff for the WorldCom class action, and the law firms of Barrack, Rodos & Bacine and Bernstein Litowitz Berger & Grossmann LLP were approved as Co-Lead Counsel for the Class. Click here to view the Memorandum of Agreement between Citigroup and Lead Plaintiff. In announcing the settlement in a press release and at a press conference in which BRB Partner, Jeff Golan, and BLBG Partner, Sean Coffey, participated, Comptroller Hevesi stated: “With this settlement, we have gained an extraordinary recovery for WorldCom bondholders and stockholders. This settlement, while historic, is only the first step. We will continue to pursue our claims against the others who bear responsibility for the debacle at WorldCom, including the remaining 17 underwriters, WorldCom’s auditor, Arthur Andersen, and the former directors and senior officers of WorldCom.” In further commenting on the settlement, Comptroller Hevesi stated: “This settlement should serve as a wake-up call to those on whom the investing public depends to guard against corporate corruption such as occurred at WorldCom.” Click here to view the press release in full. During a hearing before District Judge Cote on May 11, 2004, the Judge referred to the proposed settlement as a "watershed moment" for the case, and urged all parties to the case and their counsel to "reflect on what has happened here and what they want to happen going forward." At the same hearing, the Judge reiterated that the trial with respect to all non-settling defendants will go forward, as previously scheduled, on January 10, 2005. BLBG Partners Max Berger and Sean Coffey and BRB Partners Leonard Barrack and Jeff Golan undertook the extensive negotiations leading to this historic settlement agreement with the Citigroup Defendants, which is second in amount only to the $3.2 billion settlement that the same two firms, as Co-Lead Counsel, helped to secure from Cendant and its outside auditor in the Cendant litigation. The negotiations were conducted under the auspices of District Court Judge Robert W. Sweet and Magistrate Judge Michael H. Dolinger, of the U.S. District Court for the Southern District of New York, and culminated with a face-to-face meeting between Comptroller Hevesi and Citigroup's Chief Executive Chuck Prince on Thursday, May 6, 2004. The settlement resolves all claims of the Class asserted against the Citigroup Defendants in the WorldCom securities class action, which fall into two categories: claims arising from WorldCom’s public bond offerings in May 2000 and May 2001, and claims arising out of the purchase of other publicly-traded WorldCom securities in the open market between April 29, 1999 and June 25, 2002 (the "Class Period"). As reported by the Comptroller, the Citigroup Defendants agreed to pay $1.4575 billion to settle the claims of investors who purchased bonds that WorldCom issued in May 2000 and May 2001, for which Salomon served as underwriter for approximately one-third of the outstanding bonds issued in those offerings. The litigation continues against the 17 investment banks that underwrote the remaining two-thirds of those WorldCom bonds, including J.P. Morgan Securities, Bank of America Securities, and Deutsche Bank. Comptroller Hevesi noted that the settlement with the Citigroup Defendants offers the other banks the option to settle within 45 days at the same pro rata ratio as Salomon Smith Barney. If the banks accept that offer, another approximately $2.8 billion would be paid to bond purchasers. In addition, the Citigroup Defendants agreed to pay $1.1925 billion to investors who purchased WorldCom common stock and certain other publicly-traded securities of WorldCom during the Class Period. Going ForwardThe Lead Plaintiff and Lead Counsel expect that the parties to the settlement will submit to the District Court in early June a formal Stipulation and Agreement of Settlement, along with proposed forms of a Notice of Proposed Settlement, a Summary Notice for newspaper and business wire service publication, a Proof of Claim and Release, and the parties' proposed Final Judgment. Assuming the District Court grants preliminary approval to the settlement, the Notice to Class members will be sent out in June or July 2004, and Class members who wish to participate in a distribution of the Settlement Amount -- and any further recoveries in the case that may be obtained by Plaintiffs -- will have a set period of time within which to submit their Proof of Claim and Release forms to a Court-appointed claims administrator. As with the earlier Notice of Pendency of Class Action, the Notice of Proposed Settlement and the Proof of Claim and Release form will be posted on Lead Counsel's website for the litigation, www. worldcomlitigation.com. The Parties to the settlement expect that the District Court will schedule a final hearing on the proposed settlement sometime during the last three months of 2004. For the time being, the Comptroller and Lead Counsel urge Class members to gather their records of transactions in WorldCom's publicly-traded securities over the course of the Class Period, and further have available information concerning the amount of WorldCom stock and publicly traded debt securities that they owned as of April 29, 1999 - the start of the Class Period. Lead Plaintiff is preparing the Stipulation of Settlement and all associated documentation for submittal to the District Court for preliminary approval of the Citigroup settlement. If and when the Court grants preliminary approval of the settlement, the claims administrator, under the direction of the Lead Plaintiff and Co-Lead Counsel, will issue a Notice of Proposed Settlement along with a Court-sanctioned Proof of Claim and Release form. |