The Wall Street Journal reported (subscrip. req’d) today that seventeen former WorldCom bond underwriters, as part of the pretrial “requests for admission” in the securities class action pending in the S.D.N.Y., refused to admit that any of WorldCom’s financial reports were false. Judge Cote apparently expressed scepticism over this position at the hearing.
The WSJ also reported that ten of WorldCom’s former directors have agreed to settle allegations that they did not properly oversee the company for $50 million. An official announcement of the settlement could come this week. Bloomberg has a story on the settlement.
Quote of note (WSJ): “Asked about its attorney’s exchange with Judge Cote, J.P. Morgan spokeswoman Kristin Lemkau yesterday said the bank and its co-defendants ‘do not contend that no financial fraud occurred at WorldCom.’ While Judge Cote characterized the banks’ responses as an across-the-board denial, Ms. Lemkau said that, in fact, is not the banks’ position. ‘The financial fraud and its concealment from us has been the centerpiece of the underwriters’ defense for two years and is a substantial part of our motion for summary judgment to have the entire case dismissed,’ Ms. Lemkau said. ‘That is different from whether — for purpose of responding to a request to admit — a particular line item in a particular financial statement was false, an issue which involves, among other things, accounting judgment and a review of the discovery record, which is not complete.'”