Worldcom Settlement: Round Up the Usual Suspects
Remember July 24, 2002, when the S&P 500 hit an intra-day low of 775? I do, because that was the day I saw a seasoned investor finally lose it, and place a bunch of "sell" orders on good solid stocks that he had held for a long time.
This champion of the previously gloat-worthy American-style capitalism and its vaunted, unparalleled "transparency," had finally lost confidence in the institution that he had crowed so loudly over for so long. The mendacities of Meeker and Blodgett hadn't gotten this investor to this point. The shell-game accounting fraud of Enron hadn't gotten this investor to this point. But the massive and shocking misstatements by Worldcom finally sent this guy over the edge. And he sold many stocks close to the bottom of their multi-year values, reaping himself some nice losses, and including himself in the big club that locked in their losses from the $8.5 trillion slide in American corporate market value.
Ironically, but not surprisingly, I found myself butting heads with this same doctrinaire gentleman a few months later while discussing the merits of proposals by former NYSE head Felix Rohatyn involving greater regulatory scrutiny of corporate representations to shareholders and the public. The ape regards his tail. Repeats until he fails.
Worldcom's Bernie Ebbers is supposedly soon to be off to the big house (though he just won another delay of his sentence), and today some of his helpers, the usual suspects at Citigroup and elsewhere, were asked to shell out just a little bit too:
AP Reports on the Worldcom settlement
Sept. 21, 2005
NEW YORK - A federal judge Wednesday approved legal settlements that will return more than $6.1 billion to investors who lost money in the WorldCom accounting fraud.
. . .
The largest chunks are a $2.58 billion payment by Citigroup Inc. and a $2 billion payment by JPMorgan Chase & Co. Investors claim the companies, which were among those that underwrote or traded WorldCom securities, should have been aware of the fraud.A federal judge has approved settlements worth more than $6 billion in civil lawsuits related to the WorldCom accounting fraud.