Final WorldCom ex-director settles lawsuit

/ Source: The Associated Press

The last former WorldCom board member in a lawsuit brought by investors in the collapsed company agreed on Monday to pay $4.5 million out of his own pocket to settle the claim.

The settlement reached by Bert Roberts brings to $24.75 million total that 12 former board members are paying personally to settle the class action suit. Insurers for the 12 are kicking in an additional $36 million.

The investor lawsuit alleges the board members, auditor Arthur Andersen and major investment banks that underwrote WorldCom securities should have known in advance about the fraud that sank WorldCom in 2002.

The suit is led by New York state Comptroller Alan Hevesi, acting as trustee of the state employees' retirement system.

The major investment banks have already agreed to pay more than $6 billion in settlements. JPMorgan Chase & Co. became the last of the banks to settle, agreeing last week to pay $2 billion.

If U.S. District Judge Denise Cote approves the ex-board members' settlement, Arthur Andersen would be left as the only defendant in the lawsuit. Jury selection was set for Wednesday.

Cote said in a hearing Monday that the Roberts settlement was "a significant achievement for the class" and said she hoped Roberts would reach "emotional peace" by putting the matter behind him.

Last week, former WorldCom CEO Bernard Ebbers was convicted of fraud, conspiracy and false regulatory filings in the WorldCom accounting scandal. He could spend the rest of his life in prison.

Roberts testified as a witness for Ebbers at his trial.

WorldCom collapsed in 2002 amid revelations of an $11 billion accounting fraud to inflate earnings and hide expenses. It has since re-emerged as MCI Inc., based in Ashburn, Va.

The class action lawsuit began as many investor suits, eventually consolidated by the judge.

Some details remain to be worked out in the settlement, including how much insurance money should be left to Ebbers to defend himself against civil suits.