The $2.65 billion check

Citigroup

(C) - Get Report

must write to settle its involvement in the

WorldCom

fraud probably portends a cascade of similar paydays for wronged investors still awaiting justice at the courthouse.

The settlement between Citigroup and WorldCom's stock- and bondholders will be the first of many such deals announced in the coming months, as Wall Street big banks try to move beyond the corporate scandals like those at

Enron

,

Global Crossing

and other companies.

"These big-name cases have been in the works long enough we are going to see some settlements going forward,'' says Michael Perino, a professor at St. John's University School of Law and an expert of class-action litigation. "These cases are so notorious, the risk of going to trial is worse than usual.''

Now that Citigroup has agreed to pay big bucks for its role in underwriting WorldCom's bonds and stock offerings, don't be surprised if

J.P. Morgan Chase

(JPM) - Get Report

,

Bank of America

(BAC) - Get Report

,

Goldman Sachs

(GS) - Get Report

,

Credit Suisse First Boston

(CSR)

,

Deutsche Bank

(DB) - Get Report

and the dozen other investment banks that sold WorldCom bonds look to cut their own deals.

In fact, New York State Comptroller Alan Hevesi, who represents the lead plaintiffs in the WorldCom litigation, offered Monday to settle with those other banks on a formula similar to the one that led to the Citigroup deal. Hevesi says a pro rata settlement with those other banks -- based on their level of WorldCom bond underwriting work -- would produce another $2.8 billion in settlement checks.

Hevesi, as the administrative head of the New York State public employees' pension funds, represents some of the biggest buyers of WorldCom bonds. Worldcom, which emerged from bankruptcy on April 20, is now called

MCI

(MCIC)

.

The other Wall Street banks might not like Hevesi's terms since Citigroup's legal liability in the WorldCom litigation presumably was a lot larger given the prominent role of telecom analyst Jack Grubman. But the offer could represent a starting point in future negotiations, and no matter how the chips fall, the amount of money on the table is very high.

Donald Langevoort, a securities professor at Georgetown University School of Law, says he's sticking with an earlier prediction that Wall Street's big financial houses may shell out a total of $20 billion to settle the various class-action lawsuits arising out of the corporate scandals of the past few years.

Indeed, even as Citigroup was announcing the WorldCom settlement, the world's biggest financial services firm said it was upping its legal reserve by another $4.95 billion to cover the cost of resolving other litigation. The move, which will lower second-quarter earnings by 95 cents a share, raises the company's overall litigation reserve to $6.7 billion.

That sum covers a number of pending lawsuits, including the spate of class actions and arbitrations filed against the bank in wake of last year's tainted stock-research scandal. But legal experts and bank analysts believe much of that reserve is being set aside to cover the bank's liability over its role in the Enron scandal.

Citigroup, J.P. Morgan, Bank of America, CSFB,

Merrill Lynch

(MER)

,

Canadian Imperial Bank of Commerce

(BCM) - Get Report

and a slew of other banks have been embroiled in mediation for nearly a year with the plaintiffs' lawyers in the Enron case. The parties are said to be far from reaching a settlement, but many expect the payouts by the banks in Enron to trump anything ever seen in the class-action arena.

All of these developments are good news for investors who lost billions in the stocks of these companies when they went bust. While the payouts by the Wall Street banks will cover only a fraction of the investing publics' overall losses, investors will likely make out better in these settlements than most other class-action cases.

Legal experts say the notoriety of the scandals, and the recent inclination of juries to punish corporate wrongdoers, is working to help plaintiffs' lawyers push for outsized settlements.

"I think internally banks are having a big debate about how quickly to get this kind of litigation behind them and get it out of newspapers and get on with their business,'' said Langevoort.

Some on Wall Street believe that J.P. Morgan, in light of Citigroup's decision to up its legal reserve, has set aside too little money for an Enron settlement. J.P. Morgan currently has $745 million in a legal reserve, of which $524 million is targeted toward Enron litigation.

Merrill Lynch brokerage analyst Guy Mozkowski, in a research note, says that amount may not be enough, especially since Citigroup and J.P. Morgan are seen as having equal liability in the Enron scandal. "Citi's move would appear to put pressure on JPM to do something similar, given that JPM and Citi had business relationships with Enron that appear, in our view, to have been broadly similar in exposure,'' he says.

If banks like J.P. Morgan announce in the coming months that they are increasing their reserves, it could be a tip-off that a settlement in Enron is close at hand.

Of course, it's worth remembering that it's the plaintiffs lawyers who are the real winners in these big settlements. In class actions, it's not unusual for lawyers to walk away with anywhere from 20% to 30% of the settlement pie.

"The lawyers always get the biggest payday,'' says Perino.

Lawyers at Bernstein Litowitz Berger & Grossmann, the lead plaintiffs in the WorldCom litigation, were unavailable for comment.

In the coming weeks, look for the law firm to start placing ads in newspapers telling investors how to collect their share of the WorldCom booty. Investors also may get letters in the mail alerting them that they could be entitled to a recovery, although it will probably be a number of months before the proceeds are allocated.