Friday, July 1, 2005
Former WorldCom CEO Bernie Ebbers agreed to settle the securities fraud class action with an immediate $5 million payment and to put the rest of his assets into a liquidating trust. Under the terms of the agreement reached with the plaintiff class and approved by the U.S. Attorney's Office, Ebbers will sell his remaining assets, including his Mississippi home and investments in various other businesses, with 75% of the proceeds from the sales going to WorldCom investors and 25% back to the company, which is now MCI Inc. and is scheduled to be acquired by Verizon Communications later this year (assuming Qwest doesn't mess up the shareholder vote). The plaintiff class also obtained personal payments of approximately $25 million from the other WorldCom directors that is not covered by any insurance or company indemnification agreement, a first in corporate litigation.
According to an AP story (on Law.Com here), Ebbers must vacate his home by Oct. 31, and the trust will pay an allowance to his wife. With sentencing in the criminal case currently set for July 13, this closes out another phase of the litigation in which Ebbers is involved. I would expect the SEC to settle its case against Ebbers shortly, although it is unlikely there will be any civil penalty after this agreement, and the probable permanent injunction and director/officer bar will be more of an afterthought. (ph)