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Last updated at: (Beijing Time) Tuesday, October 01, 2002

New York attorney general sues former WorldCom CEO

New York state attorney general Eliot Spitzer sued former WorldCom chief executive Bernard Ebbers and four top executives of other telecommunications companies on Monday for allegedly making millions of dollars in profits from hot initial public offerings.


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New York state attorney general Eliot Spitzer sued former WorldCom chief executive Bernard Ebbers and four top executives of other telecommunications companies on Monday for allegedly making millions of dollars in profits from hot initial public offerings.

Ebbers, chairman of Qwest Communications Metromedia Fiber Networks and the CEO of McLeod USA are among those charged with receiving IPO shares in exchange for steering their companies' investment banking business to Salomon Smith Barney.

Spitzer said he is seeking 28 billion dollars in profits the defendants allegedly made by selling IPO shares, and additional 1.5 billion dollars from sales of stocks in the defendants' respective companies.

"The CEO was personally bought off by being given IPO allocations," Spitzer said at a New York news conference. "Small investors were left holding the bag."

In the lawsuit, Spitzer named Ebbers, Qwest Communications chairman Philip Anschutz, former Qwest chief executive officer Joseph P. Nacchio, Metromedia Fiber Networks chairman Stephen Garofalo and former McLeod USA chief Clark McLeod.

The lawsuit is the latest effort to restore shattered investors' confidence that sent Wall Street stocks to their multiyear lows on Monday. During the session, the Dow index hit a four-year low, the Nasdaq composite plunged to the lowest level in six years, andStandard & Poor's index closed at a five-year low.

Spitzer claims Ebbers made more than 11 million dollars from several dozen IPOs in the late 1990s. Anschutz allegedly made 5 million dollars, McLeod more than 9 million dollars, and Nacchio more than 1 million dollars.

"The executives received huge perks from a vendor who sought their business," he said. "This clearly was unjust enrichment, andit violated the disclosure requirements of state law. Uninformed shareholders, meanwhile, lost millions of dollars when the stocks in the defendants companies crashed."


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