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Local Governments Sue WorldCom

November 07, 2002|From Reuters

A coalition of California local governments and a public pension on Wednesday filed suit against WorldCom Inc. executives and its investment banks in the latest bid to recover money lost in the company's failure.

The $55-million lawsuit, filed in Los Angeles County Superior Court, charges the underwriters and company executives with selling bonds between 1998 and 2001 based on false financial statements.

It names former WorldCom Chief Executive Bernard J. Ebbers, former Chief Financial Officer Scott D. Sullivan and current CEO John W. Sidgmore.

The lawsuit is the latest by a local government or pension fund to sue WorldCom and the banks who underwrote its bonds, plaintiff lawyers said.

Fifteen employee pension funds representing California counties and one city government joined in filing the lawsuit that seeks to recover investments in the bonds.

"Public employees should not have to sacrifice the security of their retirement because the nation's largest banks won't follow the law and put together an honest bond deal," said Louse Renne, San Francisco's former city attorney, who filed the lawsuit.

The lawsuit also names banks involved in the bond issues, including: J.P. Morgan Chase, Bank of America, Deutsche Bank, Lehman Bros., Credit Suisse and Credit Suisse First Boston, Goldman Sachs and UBS Warburg.

Separately, Sullivan asked a federal judge to move his trial to Washington or dismiss six of the seven counts of fraud against him relating to the company's $9-billion accounting scandal.

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