Bernie Ebbers decision has many in the financial community rattled. They should be – WorldCom case shows that juries are in no mood to be kind to Broadbandits and those who bankrolled them. Last week, close on the heels of the big JP Morgan settlement, there was news that Citigroup agreed to pay $75 million in settling shareholder claims arising from its role as a financial advisor to Global Crossing. Participating in the settlement are Citigroup Capital Markets (formerly Salomon Smith Barney), as well as former Smith Barney telecom analyst Jack Grubman and other individuals. The Citigroup payment represents a partial settlement reached with lead plaintiffs, the Public Employees Retirement System of Ohio and the State Teachers’ Retirement System of Ohio.
The settlement with Citigroup follows a $245 million settlement reached last year with Global Crossing’s former officers and directors. That included a $55 million contribution from GC’s co-founder and former chairman Gary Winnick, as well as $19.5 million from law firm Simpson Thacher & Bartlett. To date, Ohio has secured approximately $320 million on behalf of Global Crossing shareholders. There is another shareholder lawsuit pending against Arthur Andersen, as well as investment banks Goldman Sachs and Merrill Lynch.
One thing which amazes me the most is that Gary Winnick has gotten off scott free and gets to keep over $750 million he made from Global Crossing. The settlement dollars say coming out of Citibank or Goldman Sachs or whoever are coming out of the pockets of the shareholders of those banks, who are paying for the greed and stupidity of the handful of people. Strange this whole justice thing.