Four More Firms Settle in WorldCom Class Action

Four more Wall Street firms have reached a settlement with former shareholders and bondholders of WorldCom.

In the latest deal, Goldman Sachs(GS Quote), Lehman Brothers(LEH Quote), Credit Suisse First Boston(CSR Quote) and UBS(UBS Quote) agreed to pay a combined $100 million into a growing settlement fund. The four investment firms were the lead underwriters on a May 2000 bond offering by the telecom firm, now called MCI(MCIP Quote).

The announcement of the latest settlements comes a day after Bank of America(BAC Quote) agreed to pay $460 million in restitution in the massive securities fraud class action. Nearly a year ago, Citigroup(C Quote) reached a $2.65 billion settlement with the investors.

The lawsuit, led by a New York state public pension fund, alleges that more than a dozen financial institutions misled investors by underwriting WorldCom stock and bonds. The shareholders claim the banks were either aware or should have been aware of the massive financial accounting fraud at the former telecom giant that filed for bankruptcy in June 2002.

WorldCom emerged from bankruptcy last April as MCI.

"We commend these four investment banks for putting this issue behind them,'' said New York State Comptroller Dennis Hevesi, the pension fund's trustee. "While we are willing to talk with other defendants about potential settlements, we are looking forward to the start of trial against any remaining defendants on March 17, 2005.''

Of the remaining banks that have not settled with investors, J.P. Morgan Chase(JPM Quote) is believed to have the biggest potential liability.