Former WorldCom chairman Bert C. Roberts, Jr. — the final settlement holdout among WorldCom Inc.’s former outside directors — agreed to settle the WorldCom investors’ class-action lawsuit claims against him for $5.5 million, including $4.5 million out of his own pocket. Earlier posts on the WorldCom directors’ settlement may be reviewed through this post.
Roberts’ settlement leaves WorldCom’s former auditor Arthur Andersen as the only remaining defendant in the trial of the class action, which is scheduled to begin on Wednesday. With huge litigation exposure remaining in connection with both the WorldCom and Enron class actions cases, Arthur Andersen has apparently decided to use its remaining cash reserves (estimated to be several hundred million dollars) to defend the cases rather than dilute the reserves through settlement. Andersen really does not have much to lose in pursuing such a high risk litigation strategy. It’s not like the firm can be put out of business. The Justice Department has already taken care of that.