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CITIGROUP SETTLES WORLDCOM LITIGATION NEW YORK — The cleanup after the collapse of WorldCom Inc. advanced Monday when Citigroup Inc. announced it would pay investors $2.65 billion to settle claims that one of its investment banking units helped disguise WorldCom’s accounting fraud and inflate the price of its securities. The settlement, if approved by Southern District of New York Judge Denise Cote, removes a central player from the litigation spawned by WorldCom’s revelation that it hid more than $11 billion in costs on its balance sheet. The accounting fraud led to criminal charges against WorldCom Chief Executive Bernard Ebbers and several other top officials, triggering the collapse of the company’s stock price. It forced the company into a bankruptcy that ended last month when it re-emerged under the name MCI. The settlement leaves 16 investment banks facing civil liability in consolidated class actions that have the New York State Common Retirement Fund as lead plaintiff, represented by Bernstein Litowitz Berger & Grossman of New York and Philadelphia’s Barrack, Rodos & Bacine. Citigroup, the parent of Salomon Smith Barney, was named in the class actions because of what plaintiffs lawyers said was an incestuous relationship between Salomon Smith Barney, its star telecommunications analyst Jack Grubman and lead executives at WorldCom. They claimed Grubman and Salomon Smith Barney aided and abetted WorldCom’s record-setting accounting fraud by making material misrepresentations in analyst reports and registration statements for public securities offerings. — New York Law Journal LAWYER WINS TRANSFER OF ETHICS COMPLAINT NEW YORK — A disciplinary complaint lodged against a combative attorney at virtual war with the Roman Catholic diocese in Albany, N.Y., has been transferred downstate after the lawyer claimed he could not get a fair hearing in the region. The Appellate Division, Third Department, in a recent confidential decision obtained by the New York Law Journal, a Recorder affiliate, granted a motion by attorney John Aretakis to shift a disciplinary case to the First Department. With that order, at least three disciplinary matters initiated against Aretakis have been transferred from Albany to Manhattan. Aretakis represents numerous alleged victims of clergy sexual abuse. He is facing at least five disciplinary complaints, most of them initiated in Albany but none made by clients. The complaints were lodged either by clergy or sua sponte by disciplinary officials. Among the allegations are that Aretakis publicly revealed a confidential settlement between one of his clients and the church, made “wild and unsubstantiated” assertions that the local judiciary is corrupt, impugned the reputation of a nun, abused the judicial process to make false charges against a cleric and publicly revealed an ethics complaint lodged against him by a high-ranking priest in the diocese. — New York Law Journal

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