Illinois pensions reach settlement with WorldCom defendants
Illinois Attorney General Lisa Madigan announced early this month that three state pensions reached a settlement with almost all of the defendants in their suits against former WorldCom executives, multiple banks and the accounting firm Arthur Andersen.
The Illinois State Board of Investment (ISBI), the State Teachers' Retirement System (TRS) and the State Universities' Retirement System (SURS) will split about $23 million, as part of their settlement agreement with the defendants.
The Illinois systems filed lawsuits in 2002.
The settlement covers the common stock losses of the pension funds and their bond losses. The ISBI lost about $13 million and will recover slightly more than $6 million, according to the suit. STRS lost about $33 million and will recover about $13 million. SURS lost about $34 million and will recover about $4 million. SURS' loss includes about $28 million in stock losses.
Banks that underwrote bond offerings – such as Bank of America, Citigroup and JP Morgan Chase – are paying most of the settlement. Other banks will contribute funds commensurate with their level of involvement in the underwriting. Arthur Andersen and former WorldCom officers have made contributions, as well.
Former WorldCom CEO Bernard Ebbers and former CFO Scott Sullivan have not finished details of their portion of the settlement but have agreed in principle to pay a settlement from their personal assets.
The defendants have agreed to pay more than $650 million to about 70 pension funds. Recently, several California pensions announced a settlement with those involved in the WorldCom scandal as well (see PE Week, Oct. 31, 2005)