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Member, Beacon International Group, Ltd.
OAKLAND, Calif.--The University California intends to withdraw from a class action lawsuit to pursue its own securities-related suit against WorldCom Inc. officers and directors, analyst Salomon Smith Barney and auditor Arthur Andersen.
The university system will file suit in a California court rather than continue participating in the class action before a federal court in New York, the UC's Board of Regents announced Thursday.
The UC stands to obtain better results by filing a separate suit under California law, said James E. Holst, the university's general counsel. "A key factor in the determination was the size of the university's losses on WorldCom stock," he added.
The university's pension fund lost $353 million in 2002, when WorldCom's stock value plunged after it announced it had wrongly booked billions of dollars in expenses as capital expenditures, the university said.
Arthur Andersen provided auditing services to WorldCom. The UC said positive reports on the company produced by a Salomon Smith Barney analyst inflated the value of WorldCom stock. The UC did not say when it will file its lawsuit, but it said it may also name Citigroup Inc., the parent of Salomon Smith Barney, in the suit.
The UC system also is lead plaintiff in a class action securities lawsuit against Enron Corp.