The remnants of accounting firm Arthur Andersen have agreed to pay $25 million in compensation to investors for the part the firm paid in the Global Crossing debacle as auditor. Shortly before its collapse, Global Crossing was chosen by SWIFT as its telecommunications provider.
A federal judge in New York has also approved a $75 million settlement from Citigroup for its part as financial advisor during Global Crossing’s existence.
Additional cases are still pending against Global Crossing’s former investment bankers, including Goldman Sachs and Merrill Lynch.
The latest contributions bring the total recovery by shareholders and employees of Global Crossing to $425 million, $345 million of that from the securities class action.
Lead plaintiffs in the Global class action are the Public Employees’ Retirement System of Ohio, along with the State Teachers’ Retirement System of Ohio. The pension funds are represented by New York and Wilmington, DE-based securities law firm Grant & Eisenhofer, P.A.
In 2004, Global Crossing’s co-founder and former chairman Gary Winnick contributed $55 million to Global shareholders, one of the largest personal payments ever made in a securities case. New York law firm Simpson Thacher & Bartlett added $19.5 million to settle claims as Global Crossing’s former legal counsel. A group of 38 former Global Crossing directors and officers contributed approximately $200 million to the settlement.
The extended securities case against Global Crossing and its former directors and advisors has been heard in United States District Court for the Southern District of New York, with Judge Gerard E. Lynch presiding.
“We are very pleased with the latest participation by Arthur Andersen to settle claims from its own part in the Global Crossing debacle,” says Grant & Eisenhofer name partner Jay Eisenhofer. “Given the highly precarious, shadow state of the former Andersen firm, a settlement of this magnitude is reflective of Andersen’s failure to properly uncover the massive financial fraud perpetuated by Global Crossing, which led to staggering investor losses. We’re certain the amount would have been substantially higher had Andersen been auditing Global during the 2001 period. We are now focusing on the remaining portion of investment banking defendants for their part in structuring enormous securities underwritings by Global Crossing that should never have been offered to the public.”