Record $9.6B paid in fraud suits in '05
Corporate class-action settlement payments surge, with bulk forked out by WorldCom, newspaper says.

NEW YORK ( - The amount of money corporations paid to shareholders to settle securities class-action lawsuits surged to a record $9.6 billion last year from $2.9 billion in 2004, according to a report published Tuesday.

The bulk of the 2005 figure was due to a $6.1 billion payout made by WorldCom, The Wall Street Journal said, citing a study conducted by consulting firm Cornerstone Research.

The study did not include a $7.1 billion settlement involving former energy trading giant Enron, the newspaper said. That settlement was announced last year but hasn't been finalized.

Even excluding WorldCom and Enron, the remaining $3.5 billion paid in 2005 was the highest ever tracked by Cornerstone, the report said.

The consulting firm has tracked settlement cases annually since 1997, two years after the passage of the Private Securities Litigation Reform Act, the newspaper said.

Class-action pay settlements have surged in the wake of the burst of the dotcom bubble and recent string of accounting fraud scandals, the Journal said.

But the study's authors told the newspaper that settlement payouts may be close to peaking. That's because it usually takes two to four years to resolve class-action suits, and many of the cases being settled now were filed after the stock market downturn that began in 2000, the report said.


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