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WorldCom Class Actions Are Likely to Proceed

May 17, 2003|From Bloomberg News

A federal judge in New York indicated she would let class-action litigation proceed against most of the defendants named in shareholder suits stemming from the accounting fraud scandal at WorldCom Inc.

U.S. District Judge Denise Cote said during a hearing in federal court in Manhattan that she would tentatively allow litigation to proceed against former WorldCom Chief Executive Bernard Ebbers and other former company directors as well as Salomon Smith Barney, an investment banking unit of Citigroup Inc., and its former telecommunications analyst Jack Grubman.

In other news, Ebbers, who borrowed more than $400 million from WorldCom Inc. before its bankruptcy filing, missed a $25-million loan payment, court records show. The missed payment dims WorldCom's chances of recovering the money it lent Ebbers to help repay bank loans.

From Bloomberg News

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