A group of institutional investors is expected to announce a $651 million legal settlement with a number of Wall Street firms that underwrote securities for WorldCom Inc.

According to reports, nearly all of the settlement will be paid by 17 securities firms and banks that underwrote stock. Citigroup Inc. and J.P. Morgan Chase & Co. are expected to pay the largest amounts, in a deal that will be announced before the end of the week.

The settlement covers more than 30 individual suits and involves dozens of organizations, including the California Public Employees' Retirement System, the California State Teachers' Retirement System, American International Group, and pension funds from Illinois, West Virginia and Alaska.

In a separate agreement in September, a U.S. District Judge in Manhattan approved settlements to return more than $6.1 billion to investors who lost money in telecommunications company WorldCom Inc.'s historic accounting fraud. The deals will divide payment among approximately 830,000 people and institutions that held stocks or bonds in the company when it collapsed in 2002, the largest bankruptcy in U.S. history.

Erroneously declared revenues and expenses led to the discovery of an $11 billion accounting fraud at WorldCom, which now operates under the name MCI Inc. Former CEO Bernard Ebbers was convicted of fraud in March and sentenced to 25 years in prison.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access