Accounting firm Arthur Andersen has settled a class-action lawsuit brought by investors in WorldCom, which collapsed in 2002 in an US$11 billion accounting fraud.

WorldCom investors sued the auditor saying it had broken securities laws by failing to protect them.

The settlement came in the fifth week of a trial over the accusations against Arthur Andersen. Details of the settlement were not immediately made public.

Prior to the Arthur Andersen trial, a group of investment banks agreed to a US$6 billion settlement while 12 former members of WorldCom’s board of directors settled for US$24.75 million.

The plaintiffs in the lawsuit, which was led by New York state Comptroller Alan Hevesi, acting as trustee of the state employees’ retirement system, contended that WorldCom’s financial statements between 1999 and 2001 contained false statements.

WorldCom collapsed in bankruptcy after the fraud was uncovered. The company re-emerged as MCI Inc.