A $65 million cash settlement from Arthur Andersen LLP over securities fraud charges related to the WorldCom Inc. collapse received preliminary court approval today, confirmed Len Barrack, co-lead counsel for the plaintiffs. U.S. District Court Judge Denise Cote of the Southern District of New York gave preliminary approval to the settlement, which was contingent on the immediate payment of the $65 million to the plaintiffs in the class-action lawsuit.
Plaintiffs will also receive 20% of any future payments Arthur Andersen makes to former partners as well as payment equal to any other settlement of more than $65 million it pays to settle another claim.
Alan G. Hevesi, New York state comptroller and sole trustee of the $117 billion New York State Common Retirement Fund, Albany, was the lead plaintiff in the suit, which was in its fifth week. "The $65 million represents a substantial amount of Andersen's remaining assets," Mr. Hevesi said in a statement. "While we were very pleased with the progress of the trial before Judge Cote, we believe this recovery of cash plus a substantial percentage of potential future payments was much preferable to putting Andersen into bankruptcy in the event the jury rendered a large verdict."
Arthur Andersen was the last remaining defendant in the WorldCom civil lawsuit. Plaintiffs have received more than $6 billion from a group of investment banks that sold WorldCom bonds to investors. In addition, 12 former WorldCom directors settled for about $25 million.
