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NEW YORK — The federal judge in Manhattan overseeing the consolidated securities class action arising from accounting fraud at the former WorldCom Inc. has taken Milberg Weiss Bershad Hynes & Lerach to task for urging class members to opt out and pursue separate suits led by the firm. Southern District Judge Denise Cote said the firm engaged in “an active campaign to encourage pension funds not to participate in the class action and instead to file individual actions with Milberg Weiss as their counsel.” The judge said the firm was “running the coordinated individual actions much as a de facto class action.” Milberg Weiss’ efforts to enlist plaintiffs had “resulted in some confusion and misunderstanding of the options available to the putative class members,” Judge Cote concluded in In Re WorldCom Securities Litigation, 02 Civ. 3288. She asked John Coffey of Bernstein Litowitz Berger & Grossman, lead plaintiff’s counsel in the consolidated class action, to draft a curative notice to be sent to all members of the class, as well as a separate notice to be sent to each plaintiff that had filed an individual action. Judge Cote issued her ruling Monday after hearing arguments last week concerning four letters sent by Milberg Weiss or affiliated law firms to different municipal employee and union pension funds. In one of these letters, sent May 23 in response to an information request by lawyers for the Asbestos Workers Local 12 Annuity Fund, Milberg Weiss partner William Lerach described how the firm was bringing actions against WorldCom bond underwriters on behalf of investors holding bonds issued in four offerings between August 1998 and May 2001. Milberg Weiss, Lerach wrote, was assembling a coalition of pension funds with between $2 billion and $3 billion in losses to pursue coordinated litigation activity across the nation. Anthony Lin is a reporter for The New York Law Journal , a Recorder affiliate.

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