WORLDCOM BANKRUPTCY Citigroup agrees to pay $2.65B to settle lawsuits

The company also set aside money for potential claims in the Enron case.
NEW YORK (AP) -- Financial services giant Citigroup has agreed to pay $2.65 billion to settle class-action suits brought by investors who bought WorldCom Inc. securities before the telecommunications company's bankruptcy filing in 2002.
Citigroup's brokerage division was a key backer of WorldCom securities before WorldCom filed for the biggest bankruptcy in history in July 2002 amid accounting irregularities. Last month, the company now known only as MCI emerged from bankruptcy and shed more than $35 billion in debt.
The settlement announced today comes as the world's biggest financial services company also set aside an additional $6.7 billion for potential claims against it related to the collapse of Enron Corp., its April 2003 settlement of federal inquiries into its investment research activities, and its involvement in preferential initial public stock offerings.
Wall Street reaction
In early trading, Citi's shares were down $1.52, or 3.3 percent, at $45.20 on the New York Stock Exchange.
In the WorldCom matter, Citigroup said it had agreed to settle federal class action suits brought on behalf of those who had purchased WorldCom stock and other securities during the period from April 29, 1999, through June 25, 2002.
Charles Prince, chief executive of Citigroup, said the settlement was designed "to put an unfortunate chapter behind us so we can focus on our continuing prospects for growth."
Under the settlement, Citigroup said it denied violating any law but was settling "solely to eliminate the uncertainties, burden and expense of further protracted litigation."
It said the WorldCom payment will be allocated between purchasers of WorldCom stock and bonds. Lawyers' fees will also come from the settlement amount.