X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
MCI Inc. and 18 former executives have agreed to pay as much as $51 million to settle suits filed by workers whose retirement accounts lost billions of dollars after an accounting scandal caused the company’s stock to plummet. Under the agreement, MCI and its insurers will contribute nearly $46.8 million to a fund for about 50,000 employees whose retirement plans lost money, company spokeswoman Brittany Hoff said Wednesday. Onetime executives, including former CEO Bernard Ebbers, will pay the balance. MCI is the nation’s No. 2 long-distance company, after AT&T Corp. Stock in the company, formerly WorldCom Inc., plummeted in 2002 after it revealed an $11 billion accounting fraud that led the company to file for bankruptcy that year. The company emerged from Chapter 11 protection earlier this year. The settlement, filed Tuesday in a New York federal court, covers anyone who participated in WorldCom’s 401(k) retirement plan from Sept. 18, 1998, through July 21, 2002, Hoff said. If the court approves the settlement, workers will be notified by mail. The accounting scandal nearly wiped out the retirement savings of many MCI employees, who owned as many as 46 million shares of WorldCom stock before it filed for bankruptcy protection. Employees have said the company’s internal culture encouraged them to concentrate their savings in WorldCom stock, a pressure that intensified during the 1990s when the stock’s value shot up. Ebbers, the high-profile WorldCom founder now charged with securities fraud, also will pay up to $4 million, according to terms of the settlement. Ebbers, who has denied wrongdoing, faces a criminal trial later this year. Other parties to the settlement include former chairman Bert Roberts and the estate of former chief executive John Sidgmore. The settlement must be approved by U.S. District Judge Denise L. Cote in New York. “With this civil litigation against the company now concluding, we can place even greater focus on future success,” Hoff said. Employees are still suing retirement fund administrator Merrill Lynch Trust Co. for about $100 million. A spokesman for that company denies any wrongdoing. A lawsuit against former chief financial officer Scott Sullivan is suspended until after his sentencing on fraud charges in the fall. In May, Citigroup Inc. agreed to pay a $2.65 billion to settle a fraud suit by WorldCom investors. Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.