Thursday, July 28, 2005

3 former WorldCom executives settle with investors

Three former executives of WorldCom Inc. have reached settlements in a class action lawsuit brought by investors who lost billions of dollars when the telecommunications firm collapsed in an $11 billion accounting fraud, a federal judge said Monday.

Judge Denise Cote, of Manhattan federal court, scheduled a hearing Thursday to discuss preliminary approval of the settlements, reached by former WorldCom finance chief Scott Sullivan, former accounting director Buford Yates and former controller David Myers.

The three former executives were the last remaining defendants in the investor lawsuit.

Former WorldCom CEO Bernard Ebbers, 12 former WorldCom directors, auditing firm Arthur Andersen and major investment banks that underwrote WorldCom securities have reached settlements with the investors totaling more than $6 billion.

The judge, in an order posted on a court Web site, did not indicate how much money Sullivan, Yates and Myers would pay for their parts of the settlements or whether they were likely to forfeit property. She said the details of the settlements would be made public Tuesday.

Lawyers for the three defendants and for the investors were not immediately available for comment by telephone Monday.

In Ebbers' settlement, he agreed last month to forfeit nearly all his personal assets _ a total that could reach $40 million _ including selling his Mississippi mansion. The same week, he was sentenced to 25 years in federal prison for his role in the accounting fraud, which came to light in 2002.

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