Citigroup settles WorldCom shareholder suit

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Citigroup settles WorldCom shareholder suit

Citigroup has agreed to pay $2.65bn (£1.5bn) to settle a class-action lawsuit from purchasers of WorldCom stock and bonds against the company.

The plaintiffs included investors who purchased or acquired publicly traded WorldCom securities between 29 April 1999 and 25 June 2002.

As part of the agreement, Citigroup denied having violated the law and established that it entered into the settlement to "eliminate the uncertainties, burden and expense of further protracted litigation".

Citigroup will take an after-tax charge of $4.95bn in the second quarter of 2004, which included the WorldCom settlement as well as litigation reserves for lawsuits and other legal proceedings it faces.

WorldCom filed for bankruptcy in July 2002 in the midst of a massive multibillion-dollar accounting scandal. It continued operating under Chapter 11 of the US Bankruptcy Code and changed its name to MCI when it emerged from bankruptcy last month.

The scope of WorldCom's financial woes did not become entirely clear until March, when the company disclosed it lost $48.9bn in 2000, $15.6bn in 2001 and $9.2bn in 2002.

Juan Carlos Perez writes for IDG News Service


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