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Ten former WorldCom Inc. board members have reportedly agreed to pay $18 million out of their own pockets to settle a class action lawsuit by investors in the scandal-tarred telecommunications giant. The agreement by the board members — representing about one-fifth of their personal net worth — is part of a $54 million settlement with plaintiffs, with insurers picking up the rest of the tab, according to published reports. The Wall Street Journal, The New York Times and The Washington Post reported it in Thursday editions. Paul Curnin, the lead lawyer for the 10 former board members, did not immediately return calls for comment, and a spokesman for New York state Comptroller Alan Hevesi, the lead plaintiff, declined comment. Hevesi is trustee of the New York state retirement fund, which lost $300 million in WorldCom investments. Any settlement would have to be approved by U.S. District Judge Denise Cote, who is overseeing civil suits related to WorldCom’s massive accounting fraud. A secretary for the judge said Thursday that no hearing was scheduled. The deal could set an uncomfortable precedent for other corporate executives in securities lawsuits — although the WorldCom case stands alone for the scope of its massive collapse. News of the settlement comes two weeks before Bernard Ebbers, the former chief executive of WorldCom, goes on trial on criminal charges that he orchestrated the $11 billion fraud. He has pleaded not guilty. In the civil suit, investors are seeking billions of dollars from investment banks that underwrote WorldCom bonds, claiming the banks failed to accurately portray the risks associated with the investment. Citigroup has already agreed to pay $2.58 billion to settle its portion of the suit. J.P. Morgan Chase & Co., Bank of America Corp. and Deutsche Bank AG are also defendants. In February 2001, before the bonds were issued, some of the banks downgraded their own internal credit ratings for WorldCom, and some took steps to cut their exposure to the company. Cote wrote in a ruling in December that the downgrades raised questions about whether the banks “adequately described the risk of investing in WorldCom.” The civil suit is set for trial in February. The reported settlement would be unusual because executives of companies frequently rely on their insurers to foot the bill for liabilities in civil securities settlements. It would dwarf a similar settlement reached last year by former board members of collapsed energy giant Enron Corp., who agreed to pay $1.5 million out of their own pockets to former employees. The 10 settling former board members are James Allen, Judith Areen, Carl Aycock, Max Bobbitt, Clifford Alexander, Stiles Kellett Jr., Gordon Macklin, John Porter, Lawrence Tucker and the estate of John Sidgmore, who died in 2003. The newspapers said it was not clear how the burden of the $54 million payments, or the $18 million slice that is to come from the directors personally, would be divided among the 10. The newspapers reported that the $18 million would represent about 20 percent of the combined net wealth of the 10 former board members, not counting their primary homes and retirement accounts. Two other former board members, Bert Roberts and Francesco Galesi, remain defendants in the lawsuit but are considering similar settlements, the newspapers reported. WorldCom emerged from bankruptcy last year and now operates under the name MCI in Ashburn, Va. Jury selection in Ebbers’ trial is scheduled to begin Jan. 19 before a separate judge in Manhattan federal court. The star witness against him is expected to be Scott Sullivan, WorldCom’s former chief financial officer. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, rewritten, or redistributed.

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