Banks Going After Global Crossing Execs

Gary Winnick and other former executives of Global Crossing should be responsible for any damages that Goldman Sachs Group Inc., Citigroup Inc. and Merrill Lynch & Co. may be ordered to pay the telecommunications company’s shareholders, the banks said in a lawsuit.

The shareholders are suing seven investment banks, claiming they underwrote an April 2000 stock sale and issued favorable opinions about Global Crossing’s finances while the company filed misleading disclosures with securities regulators. The banks said ex-Chairman Winnick and five other former Global Crossing executives misled them and should be liable for any damages.

The banks “reasonably relied on the information and representations prepared and furnished by them, and on Global Crossing’s financial statements,” Howard Goldstein, a lawyer for the banks, said in the suit filed in federal court in New York.

Global Crossing, which owns a worldwide fiber-optic cable network, emerged from bankruptcy protection in December after erasing $12 billion in debt and $40 billion in stock value.

The shareholders are suing the banks under a federal law that holds banks that underwrite stock or bond sales responsible for an issuer’s wrongdoing that they could have reasonably known about.

U.S. District Judge Gerard E. Lynch last month refused to throw out most of the claims against seven investment banks named in the lawsuits.

Representatives of the banks declined to comment or could not be reached.

D. Ward Kallstrom, a lawyer for Winnick, didn’t return a call seeking comment.