As expected, a federal judge on Tuesday granted preliminary approval of Arthur Andersen's offer to pay $65 million to investors to settle its liability in a 3-year-old class action stemming from WorldCom Inc.'s 2002 collapse.
The accord ends a four-week trial in which a jury of five women and four men heard evidence suggesting that Andersen, WorldCom's former auditor, overlooked a $74-billion fraud at the long-distance telephone company. U.S. District Judge Denise Cote approved the accord at a hearing in New York.
Cote will offer all parties a chance to object before she gives final approval. The settlement was made possible because Andersen dropped its refusal to reveal its financial condition, investor lawyers said.
The settlement ends the nation's largest securities-fraud class action. Other defendants in the case -- primarily WorldCom's former investment banks -- already had agreed to pay investors a total of $6 billion to settle accusations that they were culpable in WorldCom's 2002 bankruptcy.
Andersen was convicted in 2002 of obstruction of a government probe in the Enron Corp. fraud case. The company no longer does auditing work.
New York State Comptroller Alan Hevesi, the trustee for lead plaintiff New York State Common Retirement Fund in the WorldCom case, said the $65 million was a "substantial amount" of Andersen's remaining wealth. In addition, investors will receive 20% of any remaining Andersen assets distributed to its 1,700 partners when all of the firm's litigation is concluded.