Arthur Andersen LLP, the last remaining defendant in an investor lawsuit stemming from WorldCom Inc.'s 2002 collapse, agreed to settle its liability in the case for an undisclosed sum, putting an end to the largest securities fraud class action in U.S. history.
Andersen spokesman Patrick Dorton issued a statement on the settlement Monday, but later emabrgoed and then retracted it, saying that the firm did not authorize the release of the statement in advance of a prelininary approval hearing on the settlement scheduled for this morning. The statement did not disclose the settlement terms.
Investors, led by the New York State Common Retirement Fund, alleged that Andersen, WorldCom's former auditor, overlooked the $11 billion fraud at the telecommunications company, which filed for bankruptcy in July 2002 and emerged last year as MCI Inc.
The former Big Five firm, which shuttered its audit practice in 2002 following its conviction on an obstruction of justice charge in the Enron Corp. case, denied any wrongdoing in the WorldCom case.
Prior to the trial, WorldCom's former underwriters agreed to settlements totaling more than $6 billion, while 12 former WorldCom directors in March agreed to pay a total of $60.75 million, including $24.75 million from their own pockets, to settle claims against them.
Meanwhile, the U.S. Supreme Court is set to hear arguments April 27 on Andersen's appeal of its conviction in the Enron Corp. case. The defunct firm is arguing that its conviction must be reversed because of improper jury instructions. Enron, which imploded in a record bankruptcy in December 2001, was Andersen's largest client.
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