To print: Click here or Select File and then Print from your browser's menu

This story was printed from silicon.com, located at http://www.silicon.com/

Story URL: http://management.silicon.com/government/0,39024677,39120582,00.htm

Citigroup to pay $2.65bn for WorldCom mis-selling
Better than "rolling the dice" for $54bn...

By Ron Coates

Published: Tuesday 11 May 2004

Giant US bank Citigroup has made a surprise announcement that it will pay $2.65bn to settle a class action with major WorldCom investors.

And there will be more to come as 17 other banks now have 45 days to fall in line and cough up their own share of $2.8bn.

Analysts estimate that the bill for the banks could hit $20bn. At least one other major investor and all of the small ones have yet to settle. It could be a test of endurance, or ability to pay lawyers' fees, that determines how long the cases will carry on and how much they'll raise.

The total claim in the class action suit was for $54bn. Chuck Prince, Citigroup CEO, is reported to have said: "I was not willing to roll the dice for stockholders."

The bank still denies any wrongdoing.

Banks still to cough up include big American names such as JP Morgan Chase and Bank of America, but a number of top European banks are caught in the net, mostly for selling WorldCom bonds. They include: Deutsche Bank, ABN Amro, Westdeutsche Landesbank and BNP Paribas.

WorldCom was once valued at $150bn. The investor suits relate to misleading statements by banks selling the company's bonds and shares. The company, now MCI, collapsed when it was revealed that its revenues were incorrectly stated.

WorldCom founder Bernie Ebbers and CFO Scott Sullivan will face criminal charges later this year over the collapse of the giant telco.