Citigroup Agrees to WorldCom Settlement
New York (May 11, 2004) — Financial services conglomerate Citigroup said it would pay $2.65 billion to settle a class-action suit filed by shareholders of WorldCom stocks and bonds who charged that the company was complicit in the telecommunications concern’s massive accounting fraud.
Citigroup — which admitted no wrongdoing — said it would pay the settlement amount, which will be roughly $1.64 billion after taxes, to investors who acquired WorldCom stocks or bonds between April 29, 1999, and June 25, 2002.
WorldCom filed for bankruptcy in 2002 in the wake of a behemoth accounting scandal of more than $11 billion. Scott Sullivan, the company's former CFO, pled guilty to criminal charges, and former WorldCom chief executive Bernard Ebbers was subsequently indicted.
A January report from former U.S. Attorney General Richard Thornburgh on the massive bankruptcy stated that Ebbers had a relationship with investment bankers from Citigroup.
The company, now known as MCI, emerged from bankruptcy last month.
— WebCPA staff