Eleven former board members of WorldCom have agreed to pay $20.25 million of their own money to settle a lawsuit by former investors in the company.
NEW YORK — Eleven former board members of WorldCom have agreed to pay $20.25 million of their own money to settle a lawsuit by former investors in the company, New York State Comptroller Alan Hevesi said yesterday.
The settlement with the 11 board members, which a judge still must approve at a hearing expected next week, represents more than the members were paid during their tenures, Hevesi’s office said in a statement.
Under the deal, insurance companies who wrote policies for the board members will pay investors an additional $35 million, bringing the total settlement to $55.25 million, Hevesi’s office said.
Hevesi, who acts as the sole trustee of the New York State Common Retirement Fund, is the lead plaintiff in lawsuits investors have filed against WorldCom, its board members and former chairman, its former banks and its former auditor, Arthur Andersen, which went under following another accounting-fraud scandal involving its auditing of Enron.
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The investors have argued that financial institutions that underwrote or traded WorldCom securities, along with the board members and Andersen, should have been aware of ongoing fraud at the company.
The 11 board members also agreed to cooperate with the investors in the ongoing lawsuits against the remnants of Andersen and WorldCom’s former chairman, Bert Roberts.
WorldCom collapsed in an $11 billion accounting fraud in 2002.
Former CEO Bernard Ebbers faces up to life in prison after he was convicted Tuesday of orchestrating the fraud.