Two Illinois Pension Systems Sue Over WorldCom LossesJul 12, 2002 | AP
Two Illinois pension systems are suing after losing millions of dollars by investing in the downfallen telecommunications company WorldCom Inc.
In the lawsuit, the Teachers' Retirement System and the State Universities Retirement System claim WorldCom, some top executives and several investment firms knew the company was in financial trouble but hid that when selling dlrs 12 billion worth of bonds last year.
WorldCom executives have admitted disguising expenses to appear more profitable.
"Basically, we're coming to learn the company was aware of its financial woes and placed knowingly false information in the registration statement for those bonds," Jon Bauman, executive director of the Teachers' Retirement System, said Friday.
His pension system lost about dlrs 11 million on that bond sale, and the university system lost roughly dlrs 4 million to dlrs 5 million. They lost more money on other WorldCom investments, but those losses are not part of the lawsuits.
The total losses are just a tiny fraction of the systems' overall worth, and officials say there is no threat to retirees' benefits.
The value of WorldCom stock has collapsed, so there may be little chance of the pension systems recovering money from the company. But they might be able to collect damages from executives and investment firms, Bauman said.
The two pension funds are also part of a class-action lawsuit against WorldCom.