Court Preliminarily Approves Additional WorldCom Settlement

10/2/2012 - U.S. District Judge Denise Cote has preliminarily approved an additional $38 million settlement in In re WorldCom, Inc. Securities Litigation. The WorldCom class action, in which BR&B served as co-lead counsel for Lead Plaintiff the Comptroller of the State of New York State as Trustee for the New York State Common Retirement Fund, was resolved by settlements in 2004 and 2005 with the various defendants in an aggregate settlement amount of approximately $6.15 billion. One of the settlements achieved in the case was with Arthur Andersen LLP, WorldCom's former outside auditor. The original $65 million settlement with Andersen, which followed nearly five weeks of trial, included the possibility of certain contingent payments. Andersen now anticipates making some of the contingent payments and has sought to resolve the contingent payment claims for a fixed amount. Such a resolution, subject to approval of the Court, would allow a single distribution to members of the WorldCom class that had cashed their earlier distribution payments, without requiring the class to continue to wait for a payment on the contingent payment obligation. The parties have now agreed that Andersen will make a further payment of $38 million for the benefit of the WorldCom class in exchange for a full release of the contingent payment claims that had been negotiated as part of the initial settlement.

On October 2, 2012, Judge Cote granted preliminary approval of the proposed settlement of the contingent payment claims. Notices will be provided to WorldCom class members who are eligible to receive additional distributions from the settlement fund, and the Court will hold a final settlement hearing on December 14, 2012. 

Assuming approval of the settlement, the total settlement payments from Andersen will be $103 million, making it one of the largest settlement payments ever by an accounting firm in a securities class action.

If you have any questions about the case, please email BR&B partner Jeffrey W. Golan at jgolan@barrack.com or contact him by telephone at (215) 963-0600.