US - The five New York City pension funds have been awarded $78.87m in a securities fraud action that arose from the collapse of WorldCom in 2002.
The money will be distributed among the five NYC funds - Employees' Retirement System (NYCERS), Teachers' Retirement System (NYCTRS), Police Pension Fund, Fire Department Pension Fund, and Board of Education Retirement System – with the NYCERS ($29m) and NYCTRS ($23.2m) the main beneficiaries.
The funds estimated the settlement was approximately three times as much as they would have received had they remained members of the recently settled WorldCom class action.
The funds suffered damages of around $133m - $66m on open-market purchases of WorldCom stock and bonds, and about $67m on purchases of WorldCom bonds in registered public offerings - following the market collapse of WorldCom stock and bonds, which lead to one of the largest corporate bankruptcies in US history.
The underwriters of two major WorldCom bond offerings in 2000 and 2001 will pay the principal share of the settlement. The settling defendants include Citigroup, J.P. Morgan, Bank of America, Deutsche Bank, and ABN AMRO among others.
New York City comptroller William C. Thompson Jr said, “This settlement represents a substantial victory for the New York City Pension Funds, as shareholders who invested their money and their trust in WorldCom, only to lose more than $100m. The prompt payment of that settlement money to the Funds enables them to put it to work for their beneficiaries right away.”
Following WorldCom's collapse after disclosure of a $11bn accounting fraud in 2002, the funds filed an action in the New York State supreme court seeking to recover losses from their investments in WorldCom stock and bonds.
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