WorldCom class action nets another $428m from banks

March 11, 2005
By Caroline Merrell, Banking Correspondent

FOUR investment banks have agreed to pay a total of $428.4 million (£223 million) to settle claims relating to a class-action lawsuit brought by investors in WorldCom, the collapsed telecoms company.

The payments bring the amount handed over by banks to settle the dispute to $3.56 billion, the largest recovery achieved in a class action.

Alan Hevesi, the New York State Comptroller, said that he had reached an agreement with ABN Amro Bank for a settlement of $278.4 million. Mitsubishi Securities, the Japanese bank, has agreed to pay $75 million, while BNP Paribas and Mizuho International have both agreed to pay $37.5 million.

The WorldCom action was brought against former officers and directors of the company; its accountant, Arthur Andersen; and more than a dozen financial firms that were underwriters of WorldCom bonds. Mr Hevesi pointed out that the previous record was the $3.2 billion settlement over Cendant, the services giant, in 2000 over allegations of accounting fraud.

http://www.timesonline.co.uk/newspaper/0,,174-1520198,00.html