CalPERS Sues WorldCom for Bond Losses
The California Public Employees Retirement System, the largest U.S. pension fund, and other pension funds have sued WorldCom Inc. over $433 million in bond losses after the long-distance provider said it hid $3.9 billion in costs.
Lawyers for Sacramento-based CalPERS, the California State Teachers Retirement System and the Los Angeles County Employees Retirement Assn. filed suit in state court in Los Angeles accusing WorldCom of misleading investors about its financial health in a May 2001 bond offering.
For the record:
12:00 a.m. July 17, 2002 For The Record
Los Angeles Times Wednesday July 17, 2002 Home Edition Main News Part A Page 2 ..CF: Y 10 inches; 387 words Type of Material: Correction
CalPERS lawsuit--In a brief in Tuesday’s Business section, Bloomberg News reported that Goldman Sachs Group Inc. was among those underwriters sued by the California Public Employees’ Retirement System. It was not sued.
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The suit joins a host of other suits filed by state pension funds seeking to recoup billions in losses tied to WorldCom’s bonds.
In the suit, CalPERS said it lost $338 million on WorldCom’s 8.25% bonds due 2031, while the teachers’ retirement fund lost $45 million on the same bonds. The Los Angeles employees fund lost $25.9 million on the 8.25% bonds and an additional $24.1 million on 7.5% bonds due 2011.
The California pension funds also sued underwriters including J.P. Morgan Chase & Co. and Goldman Sachs Group Inc., as well as WorldCom’s former accountant, Arthur Andersen.
WorldCom officials weren’t immediately available to comment.
