Global Crossing Ltd. (Nasdaq: GLBC), a fiber-optic network operator that emerged from bankruptcy a few months ago, received preliminary court approval on Friday for a settlement of the securities class action pending against the company in the S.D.N.Y. (as well as a related ERISA action). The case alleges that Global Crossing and its executives falsely inflated the company’s revenue by entering into sham swap transactions.
According to a Bloomberg report, the settlement is for $325 million ($245 million for the securities case and $85 million for the ERISA case). Although the company’s insurers are paying the bulk of the securities class action settlement, former-CEO Gary Winnick ($30 million) and Simpson, Thacher & Bartlett ($19.5 million) are also making significant contributions. Simpson Thacher was not even a named defendant, but has been accused of engaging in a “flawed and incomplete” investigation on behalf of the board committee that examined the swap transactions.
The settlement is not global – the securities class action will continue against Global Crossing’s accountants and underwriters, including Arthur Andersen, Salomon Smith Barney, J.P. Morgan, and Goldman Sachs.
Addition: The New York Times had a fairly comprehensive article on the settlement in Saturday’s edition.