Bank of America to settle WorldCom lawsuit

CHARLOTTE, N.C. — Following the lead of Citigroup Inc., Bank of America Corp. on Thursday became the second large U.S. bank to settle claims stemming from a class-action lawsuit by former shareholders of WorldCom Inc.

The decision by Bank of America to pay $460.5 million to settle the case came as closing arguments were being heard in the criminal trial of former WorldCom chief executive, Bernard Ebbers, who is accused of fraud, conspiracy and other charges in what prosecutors allege was an $11 billion accounting fraud at the company.

Last year, Citigroup Inc., the nation’s largest financial institution, paid $2.58 billion to settle its share of the class action suit.

The suit was brought against more than a dozen Wall Street firms by individuals and institutions who invested in stocks and bonds before the 2002 collapse of the communications company in an accounting scandal.

The investors claimed the defendants should have been aware of ongoing fraud at WorldCom. WorldCom has since emerged from bankruptcy as MCI Inc.

In a news release, the Charlotte-based Bank of America, the nation’s third-largest bank, denied violating any laws, saying it decided to settle the claims “to eliminate the uncertainties, expense and distraction” of further litigation.