American Lawyer has a feature article (via a law firm website) in its Litigation 2005 supplement that lays out the events surrounding the WorldCom settlements. The settlements totaled over $6 billion.
Category Archives: WorldCom
Compliance Week has an article on the battle between counsel for the WorldCom class action plaintiffs and counsel for the WorldCom opt-out plaintiffs over who obtained a better settlement for their clients. The competing press releases can be found here (class action plaintiffs) and here (opt-out plaintiffs). Thanks to Securities Litigation Watch for the link.
Addition: An interesting sidenote to the $651 million settlement with the opt-out plaintiffs – Citigroup and J.P. Morgan agreed to join the plaintiffs in petitioning the SEC to toughen its disclosure rules for securities offerings.
The editors of the Jackson Clarion-Ledger are not pleased with the WorldCom settlements. Of course, they also appear to believe that Citigroup and JPMorgan Chase will be receiving, rather than providing, most of the settlement funds.
Quote of note: “But the settlement is top heavy: $2.58 billion to Citigroup and $2 billion to JPMorgan Chase & Co. with the rest divided among about 830,000 people and institutions. That’s small solace to the small investor, including those in Mississippi who trusted Ebbers.”
MarketWatch reports that U.S. District Judge Denise Cote (S.D.N.Y.) has given final approval to a series of settlements in the WorldCom case. The settlements were preliminarily agreed to earlier this year and total $3.6 billion.
Quote of note: “‘Out of some 4 million potential class members, more than 830,000 of whom submitted proofs of claim, only seven filed timely formal objections to the 2005 settlements,’ Judge Cote said in her opinion. ‘The very low number of objections evidences the fairness of those settlements.'”
Addition: A New York Law Journal article (via law.com – free regist. req’d) discusses the related attorneys’ fees award. In total (including earlier settlements), the two lead plaintiffs’ firms will receive $335 million.
Corporate Counsel has a short article (via law.com – free regist. req’d) on the incentives some institutional investors are offering their counsel to obtain direct recoveries from individual defendants.
Quote of note: “Christopher Waddell, general counsel of the California State Teachers’ Retirement System, said that he uses both bounty and sliding-scale fees in order to ‘incentivize’ his outside counsel to go after personal assets. CalSTRS, the nation’s third-largest public pension fund, has promised its lawyers a 2.5 percent bounty, plus an undisclosed fee, in a pending suit against the former directors of WorldCom.”
The Wall Street Journal had a feature article (subscrip. req’d) last week on the SEC’s efforts, pursuant to Section 308 of Sarbanes-Oxley (the “Fair Funds” provision), to pay out some of the large civil penalties it has collected to investors. The article focuses on the logistical challenges of the WorldCom case, where tracking down all of the injured investors and sorting out their claims is expected to take close to two years.
Quote of note: “Regulators are looking for cheaper and faster ways to get money back to investors. While the Fair Funds program was set up to be separate from private class-action lawsuits, the SEC is moving to work more closely with trial lawyers and has hitched several of its Fair Fund efforts to related class-action settlements that cover a similar set of investors. SEC funds have been combined with class-action settlements in about a half-dozen cases, including the agency’s $150 million settlement with Bristol-Myers Squibb Co. and its $25 million settlement with Lucent Technologies Inc.”
The former CEO of WorldCom is forfeiting most of his assets in settlement of the securities class action claims against him. The Associated Press reports that Bernard Ebbers, who was convicted in March of criminal fraud, “will pay $5 million up front and place the rest of his assets in a trust that will be sold off for an estimated $25 million to $40 million.” These sums will be added to the more than $6 billion paid by former WorldCom investment banks in settlement of the suit.