On 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 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.