A district court judge here gave the okay in late April to a settlement in which Arthur Andersen agreed to pay $65 million to resolve a class-action lawsuit brought by WorldCom investors who alleged that the audit firm failed to protect them by not uncovering the $11 billion fraud at the telecommunications company.Andersen also agreed to pay investors 20 percent of any remaining capital that it intends to distribute to its partners, and also to pay the difference between the $65 million and any larger settlement in any other lawsuit it may settle in the future, according to Sean Coffey, an attorney for lead plaintiff the New York State Common Retirement Fund.
The audit firm was the last defendant in the investor lawsuit stemming from WorldCom's 2002 collapse. The settlement put an end to the largest securities fraud class action in U.S. history.
"The evidence clearly showed that Andersen auditors complied with all professional obligations in their work," firm spokesman Patrick Dorton said. "There is no question that Andersen was victimized by a carefully designed and executed scheme by WorldCom's former management to conceal material financial information."
"Andersen entered into the agreement solely to avoid the risks associated with this litigation," Dorton continued.
Just a day after the settlement, the U.S. Supreme Court heard arguments on Andersen's appeal of its conviction in the Enron Corp. case. The defunct firm argued that its conviction must be reversed because of improper jury instructions. Enron was Andersen's largest client.
The court was expected to rule before it recesses for the summer in late June.
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