UC to File Its Own WorldCom Suit

The University of California said Thursday that it would sue WorldCom Inc.’s officers and directors, Citigroup Inc. and Arthur Andersen in California state court, alleging the financial and accounting firms helped the long-distance company mislead investors about its financial health.

The university, which lost $353 million on WorldCom securities when an accounting scandal toppled the firm into bankruptcy protection, is opting out of class-action litigation in federal court in New York. UC general counsel James E. Holst said the large size of the loss was a key factor in the decision to file a separate securities-fraud lawsuit. The go-it-alone stance is part of a trend among big investors aiming to bypass limits imposed on federal class actions by the 1995 Private Securities Litigation Reform Act. To handle the case, UC hired Cotchett, Pitre, Simon & McCarthy, a Bay Area law firm that last month filed a similar state court suit against Qwest Communications International Inc. on behalf of the California State Teachers’ Retirement System, which lost $150 million on its Qwest investment.

WorldCom declined to comment. Arthur Andersen and Citigroup couldn’t be reached for comment.