Friday, March 11, 2005
Add three more deep-pocketed underwriters to the list (see earlier post here) who have settled WorldCom bond investor claims that they failed to conduct adequate due diligence about the company. Deutsche Bank will be paying the largest amount in this group -- $325 million -- while West LB settles for $75 million and Caboto for $37.5. The brings the total settlements to approximately $4 billion (check the Securities Litigation Watch blog here for its scorecard), with one big fish out there waiting for the trial scheduled to begin March 17: J.P. Morgan. As discussed in a Wall Street Journal article (here), Morgan used Bernie Ebbers in a video touting the Morgan-Chase merger in 2001, with Ebbers saying (to the jury, I might note): "J.P. Morgan Chase is really like MCI WorldCom . . ." How's that for a ringing endorsement of a defendant accused of failing to adequately review financials of a favored client. Morgan turned down an offer last year to settle the case for approximately $1.3 billion, and that number will likely climb higher as the pool of potential defendants with those deep pockets shrinks. I sure feel good about being a Morgan shareholder.
On the Ebbers trial front, the jury watch has now surpassed watching paint dry for the level of boredom induced. If the jury does not reach a verdict today, the sixth day of deliberations, the question of deadlock (and the dreaded Allen charge) arises. (ph)