Citigroup Pays $2.65bn to Settle WorldCom Action :: Namibia Internet Gateway cc ::

Articles: Citigroup Pays $2.65bn to Settle WorldCom Action

Posted by admin on Tuesday, May 11, 2004 - 02:56 AM

Financial services giant Citigroup Inc has agreed to pay $2.65bn to settle a class-action suit brought by WorldCom investors who claimed it had engaged in a misleading promotion of WorldCom securities during a period when the phone carrier was engaging in accounting violations.
Citigroup admitted no liability but chief executive Charles Prince said it was important that it put "this unfortunate chapter" behind it. In a conference call with analysts, Prince said the settlement represents an "insurance policy" against a potential $54bn risk if the case had gone to trial. WorldCom's $104bn bankruptcy in 2002 was the largest in corporate history and epitomized the excess of the dot-com stock market boom. Now known as MCI Inc, it emerged from Chapter 11 protection last month. New York State Comptroller Alan Hevesi said the settlement "is only the first step" in pursuing claims against other firms and individuals involved in the fraud that drove WorldCom into bankruptcy. He said the settlement is "historic" because it is the largest amount ever recovered in a securities class-action from a third party.

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