Former Big Five auditing firm Arthur Andersen has reached a proposed settlement for an additional $38 million with the plaintiffs in a decade-long class-action lawsuit over the firm’s audits of the telecommunications company WorldCom.
Two law firms, Bernstein Litowitz Berger & Grossman LLP and Barrack Rodos & Bacine, announced the proposed settlement Monday. They noted that the lead plaintiff previously achieved settlements with various defendants in the case for over $6.1 billion plus interest to benefit members of the class action.
One of the previous settlements was with Andersen in 2005 and it provided for a cash payment of $65 million, as well as the possibility of certain contingent payments. The currently proposed settlement would settle and release the contingent payment claim in return for the immediate payment by Andersen of an additional $38 million in cash. A federal judge in New York granted preliminary approval to the proposed settlement on Oct. 2, according to Law360.
Andersen voluntarily surrendered its CPA license in 2002 in the wake of auditing and accounting scandals at its clients WorldCom and Enron. Most of its partners joined other auditing firms as clients also fled to competing firms. Andersen still operates to settle the remaining litigation against the firm, and it runs a conference center near its old Chicago headquarters. The firm’s former consulting arm, Andersen Consulting, is now known as Accenture.
For more information on the settlement, visit www.worldcomlitigation.com.