NEW YORK - Ten former WorldCom Inc. directors who agreed to pay $18 million of their own money to settle claims from angry investors will remain defendants in the class action lawsuit for now.
U.S. District Judge Denise Cote of Manhattan declined yesterday to remove the 10 from the case until she decides whether to grant preliminary approval of the settlement.
The $18 million personal payments are part of a $54 million settlement - the remainder to be covered by WorldCom insurers - struck between the 10 directors and the lead plaintiff, New York state Comptroller Alan Hevesi.
But some investment banks that remain as defendants in the case have told the judge they object to the terms of the settlement and would be unfairly prejudiced unless all the defendants stand trial together.
The judge warned that the federal case still could go to trial Feb. 28 as scheduled. There was no date set for a hearing on preliminary approval.
The proposed settlement is unusual because companies and their insurers - rather than board members themselves - typically bear the burden in securities litigation.
The class action investor suit arises from WorldCom's historic $11 billion accounting fraud, which led to its collapse in 2002.
Separately, jury selection begins next week in the criminal trial of former WorldCom chief Bernard Ebbers, who faces charges of fraud, conspiracy and filing false statements.