Thursday, March 17, 2005

J.P. Morgan Succumbs and Agrees to Pay $2 Billion in WorldCom Securities Fraud Class Action

The last of the bond underwriters, J.P. Morgan, threw in the towel the day before jury selection was to start in the WorldCom securities fraud class action by agreeing to pay $2 billion.  That brings the tally to approximately $6 billion paid by a slew of investment banks that brought WorldCom bonds and stock to the market while the company engaged in a massive accounting fraud that led to the conviction on Tuesday of former CEO Bernie Ebbers.  The last defendants left standing are former WorldCom auditor Arthur Andersen -- which is not exactly standing tall these days but may have insurance policies out there to cover some of the claims -- and 12 former directors of the company whose earlier settlement was rejected by U.S. District Judge Denise Cote.  The directors will likely take another shot at settling, which likely will include personal payments from each and not just amounts covered by D&O insurance.  A New York Times article (here) discusses the settlement. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/03/jp_morgan_succu.html

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