Citigroup in Pact on Global Crossing

Citigroup Inc. said Wednesday that it would pay $75 million to settle a lawsuit brought by investors over its role in the collapse of telecommunications network provider Global Crossing Ltd.

Citigroup, which was one of Global Crossing’s bankers, was accused in the class action of issuing hyped research reports and failing to disclose conflicts of interest.

It said the settlement resolved claims of investors in Global Crossing and its Asia Global Crossing Ltd. affiliate from Feb. 1, 1999, to Dec. 8, 2003. It also covers allegations against former Citigroup star telecommunications analyst Jack Grubman.

The agreement requires the approval of U.S. District Judge Gerard Lynch in Manhattan.

New York-based Citigroup denied any violations of law and said it settled “solely to eliminate the uncertainties, burden and expense of further protracted litigation.”

Last year, the world’s largest financial services company agreed to pay $2.58 billion to settle a similar lawsuit over its role in the collapse of WorldCom Inc., which emerged from bankruptcy proceedings as MCI Inc. last year.

Global Crossing, founded by Gary Winnick and once based in Beverly Hills, filed for bankruptcy protection in January 2002 after struggling with too much debt and undersea fiber-optic cable capacity. The company also faced questions about its accounting.

Now based in Florham Park, N.J., Global Crossing emerged from Chapter 11 in 2003. Its collapse wiped out $45 billion in stock value.

Last March, Winnick and some former executives and directors agreed to pay $325 million to settle investor lawsuits.

Citigroup said the settlement would cost it $46 million after taxes. The company’s shares rose 25 cents Wednesday to $48.13 on the New York Stock Exchange, and Global Crossing shares fell 21 cents to $16.05 on Nasdaq.