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The final chapter in Worldcom’s class-action civil suit comes to an end, with Andersen denying any wrongdoing.
Stephen Taub, CFO.com | US
April 26, 2005
Arthur Andersen LLP, the last holdout defendant in the WorldCom class-action lawsuit, agreed to settle with investors, according to Bloomberg.
The agreement marks the end of a three-year civil battle that stemmed from WorldCom’s 2002, $11-billion collapse, the largest bankruptcy in history. All the defendants associated with the class-action have now settled.
The details of the Andersen deal, which halted a trial that was into its fifth week, were reportedly not disclosed. The Associated Press said that the judge scheduled a preliminary approval hearing on the settlement for today and banned each side from discussing its details publicly.
"Andersen's auditors were victimized by a carefully designed and executed scheme by WorldCom's former management," Andersen spokesman Patrick Dorton said in an E-mailed statement, according to Bloomberg. “Andersen elected to enter into this settlement solely to avoid the risks and costs associated with continued litigation and expressly denies any liability or wrongdoing."
Investors had a different view of the former audit firm's culpability. "That fraud could have been stopped dead in its tracks if Arthur Andersen had been looking to do its job instead of looking to line its pockets," lead investor lawyer Sean Coffey said during opening arguments, according to Bloomberg.
While Dorton wouldn't provide any details on the settlement, he said it was "in keeping with Andersen's strategic objective of satisfactorily resolving its remaining legal matters within reasonable cost parameters," AP reported.
Seventeen banks and 12 former WorldCom directors settled before the Andersen deal. Many of the directors agreed to pay partial restitution from their personal holdings. The total settlement currently totals $6 billion.
U.S. District Judge Denise Cote, who ruled in the case, is urging defendants involved in the 45 remaining investor suits that were not part of the class action to also work out a settlement.
Andersen was involved in both the WorldCom and Enron bankruptcies. It now has fewer than 200 employees and no longer engages in auditing or consulting, Bloomberg points out.