Citigroup Inc. (NYSE: C) has announced a settlement of the claims against the company in the WorldCom litigation. Citigroup will make a payment of $2.65 billion, or $1.64 billion after tax, to be allocated between class period purchasers of WorldCom stock and WorldCom bonds. According to the press release, the path to settlement became easier last Thursday when New York State Comptroller Alan Hevesi, who oversees the lead plaintiff in the case, agreed to face-to-face discussions. Citigroup also announced that after settling the WorldCom claims it will have a “litigation reserve” of $6.7 billion on a pre-tax basis to address other legal matters, including the Enron securities class action.
News coverage can be found in Bloomberg, Reuters, and the New York Times.
Quote of note (Bloomberg): “Chief Executive Officer Charles Prince said Citigroup faced claims seeking $54 billion in the WorldCom lawsuit. ‘We made a $1.64 billion insurance policy to avoid a roll of the dice in front of a jury,’ Prince said on a conference call with investors. ‘We want to put the entire era behind us.'”
Quote of note II (Bloomberg): “Saudi Prince Alwaleed bin Talal, Citigroup’s largest individual shareholder, said Prince and Citigroup Chairman Sanford Weill called him this morning and he told them ‘I’m backing them all the way. If this was to go to court it would be so big, God help us,’ Alwaleed said. ‘The trend in the U.S. and New York is against corrupt practices. Look at Martha Stewart.'”