This NY Times article reports on the settlement of the WorldCom class action lawsuit against Citigroup. The $2.65 billion settlement is the largest ever by a bank, brokerage firm or auditor to settle an investor fraud case based on the purchase recommendation advice that such an entity gave to investors. It is the second-largest amount ever paid to settle a securities class action, trailing only the Cendant Corporation‘s payment of $2.85 billion in 2000.
Nevertheless, neither of those records is expected to last long:

The bank also said that it would take a charge in the second quarter of $4.95 billion to reflect the settlement and an addition to its reserves to cover exposure to Enron and other pending litigation. The charge is equal to roughly three months’ worth of its earnings . . . Citigroup has set aside $6.7 billion in all to cover its litigation exposure.

Ouch!
A couple of quotes of note from the Bloomberg article on the settlement:

Chief Executive Officer Charles Prince said Citigroup faced claims seeking $54 billion in the WorldCom lawsuit. “We made a $1.64 billion insurance policy to avoid a roll of the dice in front of a jury,” Prince said on a conference call with investors. “We want to put the entire era behind us.”
Saudi Prince Alwaleed bin Talal, Citigroup’s largest individual shareholder, said Prince and Citigroup Chairman Sanford Weill called him this morning and he told them “I’m backing them all the way. If this was to go to court it would be so big, God help us,” Alwaleed said. “The trend in the U.S. and New York is against corrupt practices. Look at Martha Stewart.”