Full opinion text
OPINION & ORDER COTE, District Judge. This Document Relates to: ALL ACTIONS This Opinion considers the fairness of settlements reached this year in the securities class action litigation arising from the collapse of telecommunications giant WorldCom, Inc. (“WorldCom”). These settlements include the series of settlements between the Lead Plaintiff and the seventeen Underwriter Defendants; and those between the Lead Plaintiff and the twelve Director Defendants, WorldCom’s former auditor Arthur Andersen LLP (“Andersen”), former WorldCom CEO Bernard J. Ebbers (“Ebbers”), former WorldCom CFO Scott D. Sullivan (“Sullivan”), and former WorldCom officers Buford Yates (“Yates”) and David Myers (“Myers”) (collectively, the “2005 Settlements”). The 2005 Settlements total $3,558 billion. Together with the settlement between the Lead Plaintiff and the Citigroup Defendants (the “Citigroup Settlement”), which received final approval on November 14, 2004, the Class will recover $6,133 billion, plus interest. Very few Class Members have filed objections to the 2005 Settlements. No one has objected to the amounts of the 2005 Settlements and there is only a single objection to the request for attorneys’ fees and expenses submitted by Lead Counsel for the Class. Only a brief, conclusory objection was made to the Plans of Allocation, which determine according to claim type how settlement funds will be distributed. Most of the objections address the scope of the claims release to be imposed pursuant to the 2005 Settlements and the proposed Supplemental Plan of Allocation distributed to the Class with a July 1, 2005 Notice. With the three modifications to the Supplemental Plan described below, the petition for approval of all of the 2005 Settlements is granted. Lead Counsel’s application for attorneys’ fees and expenses is also granted. Background The relevant history of the Securities Litigation through November 12, 2004 is described in an Opinion pertaining to the Citigroup Settlement. See In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC), 2004 WL 2591402, at *1-*9 (S.D.N.Y. Nov.12, 2004). That description, and the definitions therein, are incorporated by reference into this Opinion. In brief, WorldCom announced a massive restatement of its financial statements for 2000 and 2001 on June 25, 2002 (the “Restatement”), spurring numerous class actions and other lawsuits. Virtually all federal litigation was transferred to this Court by the Judicial Panel on Multi-Dis-trict Litigation. The securities class actions were consolidated on August 15, 2002, and the New York State Common Retirement Fund (“NYSCRF”) was selected as the Lead Plaintiff. The Lead Plaintiff filed a Consolidated Class Action Complaint on October 11, 2002. The securities class action, scores of actions filed by individual plaintiffs (the “Individual Actions”), many of them large pension funds, and other related securities actions were consolidated on December 23, 2002 for pretrial purposes and are referred to as the Securities Litigation. An Opinion of May 19, 2003 decided various motions to dismiss addressed to the class action complaint. In re WorldCom, Inc. Sec. Litig., 294 F.Supp.2d 431 (S.D.N.Y.2003); see also In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC) 2003 WL 21488087 (S.D.N.Y. June 25, 2003) (deciding Andersen’s motions to dismiss); In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC), 2003 WL 23174761 (S.D.N.Y. Dec.3, 2003) (deciding motions to dismiss by members of the Audit Committee of WorldCom’s board of directors). An Amended Complaint was filed on August 1, 2003; a Corrected Amended Complaint was filed on December 1, 2003. An Opinion of October 24, 2003 certified a class consisting of all persons and entities who purchased or otherwise acquired publicly traded securities of WorldCom during the period beginning April 29, 1999 through and including June 25, 2002, and who were injured thereby. See In re WorldCom, Inc., Sec. Litig., 219 F.R.D. 267, 274-75 (S.D.N.Y.2003). Putative Class Members received a December 11, 2003 Notice of Class Action (the “December 2003 Notice”). That notice informed Class Members that they could opt out of the class action by February 20, 2004, a date which was later extended to September 1, 2004. See WorldCom, 2004 WL 2591402, at *5. The $2,575 billion Citigroup Settlement was announced in May 2005. Id. Class Members received an August 2, 2004 Notice of the proposed Citigroup Settlement (the “Citigroup Settlement Notice”), which also informed them that the opt-out date had been extended to September 1 and gave them instructions on how to submit proofs of claim. A fairness hearing regarding the Citigroup Settlement was held on November 5, 2004, and that settlement was approved in a November 12, 2004 Opinion. WorldCom, 2004 WL 2591402, at *9, *11. The following is an overview of the significant events in the class action litigation since the announcement of the Citigroup Settlement. Completion of Discovery The Citigroup Defendants settled with the Lead Plaintiff just weeks before the conclusion of fact discovery. A three-week stay was entered to allow the Lead Plaintiff and the Underwriter Defendants an opportunity to determine whether they could also resolve the litigation. The Underwriter Defendants rejected an offer to settle with the Class using the same formula that resolved Securities Act of 1933 (“Securities Act”) claims in the Citigroup Settlement (the “Citigroup Formula”). Fact discovery resumed and was concluded on July 9, 2004. During June and July, the Lead Plaintiff took forty-one depositions. During the late summer and fall, the parties exchanged expert reports and conducted expert discovery. The Lead Plaintiff produced reports from five experts. Summary Judgment Opinion Regarding the Underwriter Defendants The Underwriter Defendants faced Securities Act Section 11 and Section 12(a)(2) liability stemming from massive bond offerings in 2000 (the “2000 Offering”) and 2001 (the “2001 Offering”). They filed motions for partial summary judgment on several grounds, including their reliance defense under Section 11. They argued that they were entitled to rely on World-Corn’s audited financial statements and had no duty to investigate their reliability unless they had reasonable grounds to believe that the statements were not accurate. A December 15, 2004 Opinion denied summary judgment on the reliance defense, noting that, while underwriters generally may rely on audited financial statements, a jury could find that one or more “red flags” triggered a duty for the Underwriter Defendants to conduct further investigation of WorldCom’s financial status. See In re WorldCom Sec. Litig., 346 F.Supp.2d 628, 678-81 (S.D.N.Y.2004). The Opinion also ruled that the Underwriter Defendants were not entitled to summary judgment because of their receipt of Andersen’s comfort letters for the unaudited quarterly financial statements incorporated into the Registration Statements for the 2000 and 2001 Offerings. Rather, although the comfort letters were one factor a jury could consider, the Underwriter Defendants still had to establish that they had performed a reasonable investigation regarding any unaudited financials in order to establish their due diligence defense under Section 11. See id. at 681-85. The Lead Plaintiff filed its own motion for partial summary judgment against the Underwriter Defendants. It succeeded on the issue of whether the Registration Statement for the 2001 Offering was false and misleading, but was denied summary judgment in regard to the 2000 Offering. Id. at 661. Initial Settlement %vith the Director Defendants Following settlement discussions spanning more than twenty months, the Lead Plaintiff and ten of the twelve Director Defendants executed a Memorandum of Agreement in May 2004. In the following months, the Lead Plaintiff reviewed de-tañed financial information provided by those ten directors, and the negotiations between the directors and several insurers that had issued excess directors and officers insurance policies to WorldCom (the “Excess Insurers”) continued. On January 6, 2005, a settlement was reached between the Lead Plaintiff, the ten Director Defendants, and the Excess Insurers. The settlement was for a total of $54 million; notably, the settlement amount included $18 million paid personally by the settling Director Defendants, representing more than twenty percent of those individuals’ cumulative net worth, excluding their primary residences, retirement accounts, and certain joint marital property. The balance of the settlement amount, $36 million, represented the Excess Insurers’ contribution. Portions of the January 6 settlement agreement that were conditioned on the Court’s staying the lawsuit brought by Roberts, a non-settling Director Defendant, against the Excess Insurers and deferring a decision on Roberts’ application for an order to advance defense costs were rejected by the Court in a conference on January ll. The parties to the settlement submitted a revised Stipulation of Settlement that omitted those provisions on January 18 (the “January 18 Stipulation”). The January 18 Stipulation retained a provision known as a judgment reduction formula (the “Judgment Reduction Formula”) that provided, in essence, that any damages awarded against non-settling defendants would be reduced by the greater of the settlement amount or the proportionate liability of the settling Director Defendants, as found at trial, adjusted to reflect any limitation on the financial capability of the settling Director Defendants to pay. The settlement was conditioned on approval of the Judgment Reduction Formula, which paralleled a formula that had received the Court’s approval in the WorldCom ERISA Litigation. See In re WorldCom, Inc. ERISA Litig., 339 F.Supp.2d 561, 571 (S.D.N.Y.2004). Several non-settling defendants objected to the portion of the Judgment Reduction Formula that took into account settling Director Defendants’ ability to pay, arguing that it violated 15 U.S.C. § 78u-4(f)(7)(B)(I), the applicable provision of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). In an Order of February 2, the Court ruled that the Judgment Reduction Formula in the January 18 Stipulation was impermissible under the PSLRA. An Opinion of February 10 explained this ruling in detail; a Corrected Opinion was issued soon thereafter. In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC), 2005 WL 335201 (S.D.N.Y. Feb.14, 2005). That Opinion lamented the fact that the applicable PSLRA provision rendered it highly unlikely that plaintiffs bringing Securities Act claims would be willing to settle with outside directors before reaching settlements with “deep pockets” such as underwriters. See id. at *14-*15. This policy concern was well-founded. Soon after the Judgment Reduction Formula ruling was announced, the Lead Plaintiff exercised its right to withdraw from the settlement. The Director Defendants were given until February 25 to file a pretrial order for the rapidly approaching trial, which was then scheduled to begin on February 28, 2005. Summary Judgment Opinion Regarding Andersen Andersen, which was facing claims under Securities Act Section 11 and Securities Exchange Act of 1934 (“Exchange Act”) Section 10(b), filed a motion for partial summary judgment on August 23, 2004. It argued that Lead Plaintiff had failed to present sufficient evidence that the 1999 WorldCom financial statements audited by Andersen contained a material misstatement. In addition, Andersen contended that there was no evidence of scien-ter sufficient to support a finding under Section 10(b) that Andersen certified the 1999, 2000, and 2001 WorldCom financial statements recklessly or with knowledge that material misstatements or omissions were present. A January 18, 2005 Opinion denied summary judgment for Andersen. It ruled that whether various accounting treatments, including WorldCom’s use of purchase method accounting for its 1998 acquisition of MCI, Inc. (“MCI”) and its assignment of a forty-year lifespan to the MCI goodwill, complied with Generally Accepted Accounting Principles (GAAP) and thus did not constitute misstatements, were issues of fact for a jury to decide, precluding summary judgment on the 1999 financials. See In re WorldCom, Inc. Sec. Litig., 352 F.Supp.2d 472, 493-94 (S.D.N.Y.2005). That Opinion also ruled that issues of fact existed regarding whether Andersen’s audits of WorldCom financials were so deeply flawed that Andersen acted with reckless disregard and whether certain “red flags” should have prompted Andersen to reevaluate its audit plans. See id. at 497-98. Motions in Limine On January 7, 2005, motions in limine and the Joint Pretrial Order were filed by the Lead Plaintiff and various non-settling defendants. The Lead Plaintiff filed six motions in limine; the Underwriter Defendants filed eleven, as well as a motion to phase the trial; Andersen filed eight; Director Defendant Galesi filed thirty. On February 8, an Order was issued denying the Underwriter Defendants’ motion to phase the trial and providing preliminary rulings on most of the Lead Plaintiffs and Underwriter Defendants’ motions. Full Opinions regarding most of the pending motions in limine were issued on February 17. See In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC) 2005 WL 375315 (S.D.N.Y. Feb.17, 2005) (Lead Plaintiffs motions in limine and Underwriter Defendants’ motion to phase the trial); In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC) 2005 WL 375314 (S.D.N.Y. Feb.17, 2005) (Underwriter Defendants); In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC) 2005 WL 375313 (S.D.N.Y. Feb.17, 2005) (Andersen). Several pending motions were further addressed at pretrial conferences and in later Opinions. Motions in limine by Galesi were addressed on March 4, In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC) 2005 WL 517333 (S.D.N.Y. Mar.4, 2005), and those brought by other Director Defendants were decided in a Memorandum Opinion of March 16, 2005. Significant motions in limine included that of the Lead Plaintiff to exclude evidence from the plenary trial relating to individualized issues of the class representatives. The Lead Plaintiffs motion was granted in an Opinion of February 22. See In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC), 2005 WL 408137 (S.D.N.Y. Feb.22, 2005). Motions brought by both the Underwriter Defendants and Andersen to preclude Lead Plaintiffs expert from presenting an aggregate damages calculation to the jury were denied. See WorldCom, 2005 WL 375314, at *7-*8; WorldCom, 2005 WL 375313, at *2-*5; In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC), 2005 WL 491397 (S.D.N.Y. Mar.3, 2005). Andersen filed a motion to exclude evidence of the Restatement, arguing, inter alia, that the Restatement was irrelevant and based on hearsay. Andersen’s motion was denied on the basis that the Restatement was clearly relevant to, and in fact highly probative of, the issues being tried. The Restatement was ruled an admissible business record under Rule 803(6), Fed.R.Evid. See WorldCom, 2005 WL 375313, at *6-*9. Andersen also moved to preclude evidence of corporate wrongdoing, including evidence of its indictment in connection with its role as Enron’s auditor and evidence of other litigation in which Andersen had been involved. An Opinion of March 4 ruled that references to most other litigation against Andersen would be barred, but that decision would be deferred on references to Enron, as the Lead Plaintiff had pointed to evidence that the Enron scandal directly affected certain decisions made by WorldCom’s management in regard to Andersen. See In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC), 2005 WL 578109, at *1-*2 (S.D.N.Y. Mar.4, 2005). That Opinion also deferred a ruling on the Underwriter Defendants’ motion to bar evidence of the spinning of “hot” IPO shares by Salomon Smith Barney (“SSB”), a co-lead underwriter in the 2000 and 2001 Offerings and one of the Citigroup Defendants. See id. at *2-*4. Extension of Trial Date In October 2004, in light of a two-month delay in the date of Ebbers’ criminal trial, the class action trial date was moved from January 10, 2005 to February 28, 2005. In a pretrial conference of February 18, 2005, the trial was rescheduled for March 17, 2005. The delay was attributable to the Government’s reluctance to allow several “embargoed” witnesses who were testifying in Ebbers’ criminal trial to submit to depositions by counsel for parties to the class action until the evidentiary portion of the criminal trial had concluded. See WorldCom, 2004 WL 2591402, at *4. Underwriters’ Settlements In early February 2005, the Lead Plaintiff commenced settlement negotiations with BOA and several junior underwriters who had participated in the 2000 Offering only, and after those proved successful, opened negotiations with the remaining Underwriter Defendants. The seventeen Underwriter Defendants had coordinated their litigation strategy; as trial approached, however, they procured separate settlement counsel and broke rank. In the period from March 3 through March 16, 2005, settlements totaling $3,427,306,840 were achieved between the Lead Plaintiff and each of the Underwriter Defendants (the “Underwriters’ Settlements”). On March 3, the Lead Plaintiff informed the Court that it had reached a settlement with BOA and Fleet, two Underwriter Defendants that had combined after their participation in the 2000 and 2001 Offerings, for a total of $460.5 million (the “BOA Settlement”). Of this amount, 13.61% has been allocated to Class Members who purchased bonds in the 2000 Offering (“2000 Purchasers”), and 86.39% to those who purchased bonds in the 2001 Offering (“2001 Purchasers”). The Plan of Allocation for the BOA Settlement and each of the subsequent settlements is based on the number of bonds the Underwriter Defendant was allocated in each Offering, as well as the Securities Act Section 11 damages provision, 15 U.S.C. § 77k(e). The BOA Settlement amount was calculated using the Citigroup Formula. As already noted, all Underwriter Defendants had been offered the opportunity to settle at the Citigroup Formula rate in May 2004, at the time the Citigroup Settlement was announced. On March 4, four more settlements were announced (the “March 4 Settlements”): Lehman Bros, settled for $62,713,582, and CSFB, Goldman Sachs, and UBS Warburg each agreed to pay $12,542,716. Those defendants participated only in the 2000 Offering, so all recovery from the March 4 Settlements will go to 2000 Purchasers. The March 4 Settlements likewise followed the Citigroup Formula. With two minor exceptions, all of the settlements with the Underwriter Defendants that followed included a premium over the Citigroup Formula. The Lead Plaintiff reached settlements with four more Underwriter Defendants on March 9 (the “March 9 Settlements”): ABN AMRO agreed to pay $278,365,600; Mitsubishi agreed to pay $75 million; and BNP and Mizuho settled for $37.5 million each. On March 10, Deutsche Bank settled for $325 million; Caboto settled for $37.5 million; and WestLB agreed to pay $75 million (the “March 10 Settlements”). With the exception of Deutsche Bank, all defendants involved in the March 9 and March 10 Settlements participated only in the May 2001 Offering; recovery from those settlements will thus go only to 2001 Purchasers. Of the Deutsche Bank settlement monies, 4.15% is to be distributed to 2000 Purchasers, and 95.85% to 2001 Purchasers. A conference was held on March 9 to address preliminary approval of the BOA Settlement and the March 4 Settlements. Preliminary approval was delayed, however, until the Court could address objections by JP Morgan to the Judgment Reduction Formula and Bar Order in the BOA Settlement. JP Morgan was a co-lead underwriter with SSB in both the 2000 and 2001 Offerings. A March 15 Opinion rejected JP Morgan’s objections. In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC), 2005 WL 613107 (S.D.N.Y. Mar.15, 2005). That Opinion performed a theoretical but detailed calculation of the damages faced by JP Morgan should it proceed to trial. See id. at *7. All settlements that had been announced through March 10 received preliminary approval in a March 16 conference. On March 16, JP Morgan settled for $2 billion. This was $630 million more than the Lead Plaintiff had been willing to accept in settlement in May 2004, at the time of the Citigroup Settlement, and thus represents a significant premium over the Citigroup Formula. Of the $2 billion sum, 22.75% will go to 2000 Purchasers, and 77.25% to 2001 Purchasers. The same day, Blaylock and Utendahl agreed to pay $572,840 and $234,000, respectively. The amount recovered from Utendahl will go entirely to 2001 Purchasers, while 43.02% of the Blaylock monies will be distributed to 2000 Purchasers and 56.98% to 2001 Purchasers. The final three settlements received preliminary approval in a March 18 conference. Because the Underwriter Defendants faced only Securities Act claims stemming from the 2000 and 2001 Offerings, the amounts recovered in the Underwriters’ Settlements are allocated solely to those claims. Thus, the recovery will go to Class Members who purchased bonds in the 2000 and 2001 Offerings, not to purchasers of WorldCom stock or bonds issued prior to those Offerings. The Underwriters’ Settlements, and almost all settlements in the class action litigation, were achieved with significant involvement by the Honorable Robert W. Sweet, U.S. District Judge for the Southern District of New York, and the Honorable Michael H. Dolinger, U.S. Magistrate Judge of the Southern District of New York. Severance of the Claims Against Ebbers, Sullivan, Myers, and Yates An Order of March 16, 2005 severed the claims against defendants Ebbers, Sullivan, Myers, and Yates pursuant to Rule 21, Fed.R.Civ.P. Severance was granted in light of the criminal prosecution of those four defendants; the class action litigation against them had previously been stayed for the same reason. In addition, the Order deemed that any testimony given by the four severed defendants at Ebbers’ criminal trial would be admissible in the class action trial. No party to the class action litigation had objected to this accommodation. Director Defendants’ Settlement After the Underwriter Defendants had settled with the Lead Plaintiff, the Director Defendants and Excess Insurers were able to resurrect their settlement agreement (the “Directors’ Settlement”). On March 16, the Court was informed that a settlement with the Director Defendants was imminent; a Stipulation of Settlement was executed on March 18, 2005. Former directors Galesi and Roberts, neither of whom had been a party to the original Director Defendants’ settlement, joined the settlement — Galesi in the first instance, and Roberts on March 21. Roberts’ personal contribution was $4.5 million, which Lead Counsel represents to be significantly more than twenty percent of Roberts’ personal net worth, thus representing a premium over what was obtained from the other directors. The total amount of the Directors’ Settlement is $60.75 million. Of that amount, $24.75 million was paid by the Director Defendants personally, and $36 million was contributed by the Excess Insurers. With a prior payment of $15 million, this contribution is approximately one-half of the available insurance proceeds. Unlike the January 18 Stipulation to which ten of the twelve Director Defendants were parties, the March 21 Stipulation contains a Judgment Reduction Formula that conforms to the PSLRA. The Directors’ Settlement was granted preliminary approval on March 21, 2005. The Plan of Allocation for the Directors’ Settlement provides that 80% of the funds are to be allocated to purchasers of World-Com stock and other publicly traded debt securities. The remaining 20% will be distributed to purchasers of bonds in the 2000 and 2001 Offerings. Of this amount, 4.774% will go to purchasers in the 2000 Offering, and 15.226% to purchasers in the 2001 Offering. The Directors’ Settlement also reserved other funds from the Excess Insurers for the Director Defendants’ defense of the claims pending against them in the various Individual Actions. Summary Judgment Opinion Regarding Roberts Roberts, chairman of the WorldCom board of directors throughout the Class Period and one of the Director Defendants, had also filed a summary judgment motion. Roberts argued that he had established his due diligence defense under Securities Act Section 11; that he was not a “controlling person” under Exchange Act Section 20(a); and that he had established his affirmative defenses under Section 20(a) and Securities Act Section 15. In an Opinion of March 21, 2005, which was issued hours before Roberts agreed to join the Directors’ Settlement, Roberts’ summary judgment motion was denied on all counts. See In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288(DLC), 2005 WL 638268 (S.D.N.Y. Mar.21, 2005). Andersen Trial and Settlement Jury selection in the class action trial against Andersen, the only remaining defendant against which the litigation had not been severed, began on March 23, 2005. Individualized voir dire was conducted on March 28, and opening statements began the following morning. The Lead Plaintiff presented eleven fact witnesses, three of whom testified live at trial, and four expert witnesses. Andersen presented a number of fact witnesses, including two Andersen audit and engagement partners, and one expert witness. Only two more experts were set to testify on Andersen’s behalf when the jury was dismissed because the Lead Plaintiff and Andersen had reached a settlement. The jury was remarkably attentive throughout the proceedings. The testimony from three of the Lead Plaintiffs witnesses was particularly memorable. Richard Roscitt, the former president of AT & T Business Services from December 1999 to January 2001, described his amazement at WorldCom’s E/R ratio as reported in its quarterly and annual financial statements, and the concerted efforts he and his team made over a period of months to try to understand why World-Com’s reported performance of such a critical indicator was so superior to AT & T’s comparable ratio. The Lead Plaintiff offered this testimony, a videotaped deposition which had been noticed by underwriter defendants in an Individual Action, to establish that a “red flag” existed which put Andersen on notice that WorldCom might not be accurately recording its line costs, which were its largest operating expense. If the E/R ratio constituted a red flag, it required Andersen to conduct a reasonable audit of the WorldCom records associated with the reporting of its E/R ratio. The Lead Plaintiff also offered the evidence to show that Andersen had acted in willful blindness to WorldCom’s financial condition and in abrogation of its duty as an auditor, rendering it liable under Exchange Act Section 10(b). Eugene Morse (“Morse”), who worked in WorldCom’s Internal Audit department, was the single most important individual in the discovery of the scheme at WorldCom to capitalize line costs in order to improve WorldCom’s reported revenue and E/R ratio. WorldCom’s Internal Audit department did not perform financial audits until early 2002. In May 2002, Morse noticed a discrepancy of well over $1 billion between the numbers reflected in the capital expenditures report he was reviewing and WorldCom’s publicly reported numbers. The executive director of the capital budget attributed the discrepancy to “prepaid capacity.” Morse searched for the source of the so-called prepaid capacity using a computer software called Essbase that allows one to navigate the company’s general ledger, and quickly found a series of entries of large round-number entries such as $500 million. After further investigation, often performed alone at night in WorldCom’s offices, he found that the amounts were transfers originating from line costs. Line costs were the company’s largest operating expense and therefore not an item that should be capitalized. The suspicious entries were made after the closing of the quarters they affected and directly preceded the dates on which WorldCom issued press releases announcing its financial results. Morse found $1.7 billion of fraud in the first few days of his investigation, and a total of $3 billion, dating as far back as the first quarter of 2001, within a couple of weeks. Cynthia Cooper, the head of the Internal Audit department, encouraged Morse throughout his investigation and reported the findings to the audit committee of WorldCom’s board of directors on June 20, 2002. The fraud at WorldCom was disclosed to the public several days later. Finally, Ralph Stark testified as one of the Lead Plaintiffs experts. In December 2004, the Lead Plaintiff obtained access to WorldCom’s computerized general ledger for the year 2001. In just half an hour, using a protocol to examine using Essbase the largest categories in WorldCom’s balance sheet and income statement for any large, post-closing adjustments, Stark and his team found the first “unusual” journal entry, or financial input, in WorldCom’s general ledger. Within hours, he found many large, round-number, post-closing entries. Stark testified that a junior financial analyst, accountant, or auditor with basic training in Essbase could have readily discovered the same entries in an audit of the general ledger. The Lead Plaintiff offered this evidence to illustrate how easily Andersen could have discovered the WorldCom fraud if it had audited World-Corn’s general ledger for post-closing adjustments. The Lead Plaintiffs examination at trial of Andersen’s auditors showed that Andersen’s audit planning had identified post-closing adjustments to the general ledger as one of the ways in which WorldCom could commit fraud, but that Andersen did not access the computerized general ledger to perform such an audit during the years in question. At the end of two weeks of trial testimony, the Court asked the parties to renew their settlement negotiations. The next week Andersen shared information regarding its financial condition with the Lead Plaintiff for the first time. On April 22, 2005, at the end of the fourth week of trial and a few short days before closing arguments, the Lead Plaintiff and Andersen reached a settlement (the “Andersen Settlement”). In an April 22 Stipulation of Settlement, Andersen agreed to pay $65 million in cash, plus contingent payments equivalent to 20% of any amount paid out by Andersen to present or former partners and certain other individuals in repayment of any subordinated notes issued in respect of paid-in capital or subordinated loans. The Stipulation of Settlement also contained a “most favored nation clause” entitling the Class to receive an additional amount if Andersen pays from its own funds more than $65 million in any other settlement. On April 26, preliminary approval of the Andersen Settlement was granted, the money was transferred to Lead Plaintiffs escrow account, and the jury was dismissed. The Plan of Allocation for the Andersen Settlement distributes the settlement funds between Exchange Act and Securities Act claims in the same proportion as the Directors’ Settlement Plan of Allocation. Because the first alleged misstatement by Andersen was made on March 30, 2000, however, Exchange Act monies will only be allocated to Class Members who purchased WorldCom securities on or after that date. Judge Sweet and Magistrate Judge Dolinger released an April 22, 2005 Mediators’ Statement attesting that, based on the information available to them and their discussions with the parties, “this Settlement was negotiated in good faith, and ... the Settlement and the allocation between the Securities Act and Exchange Act claims are in the public interest.” Notice to the Class A Hearing Order of June 14, 2005 (the “Hearing Order”) established the schedule for final approval of the settlements with the Underwriter Defendants, the Director Defendants, and Andersen, and approved a Summary Notice of Class Settlements (“Summary Notice”); a Summary of Supplemental Plan of Allocation (“Summary Supplemental Plan”); and a full-length Notice of Settlements of Class Action (“Class Notice”), which included the proposed Supplemental Plan of Allocation (the “Supplemental Plan”). It also extended the deadline by which Class Members could file proofs of claim from March 4, 2005 to August 26, 2005. The Hearing Order required the Lead Plaintiff to begin mailing the Class Notice (with the Supplemental Plan) by July 1, 2005 to those members of the Class who had already filed a proof of claim. Beginning on June 28, the mailings of these documents were made to over 800,000 Class Members who had filed proofs of claim. The Class Notice and Summary Supplemental Plan were mailed at the same time to approximately 3.5 million other potential Class Members. Summary Notices were published in the Wall Street Journal and the New York Times and over the PR Newswire and Bloomberg News in early July. The Class Notice presented the definition of the Class, which encompasses “[a]U persons or entities who purchased or acquired publicly traded securities of World-Com ... during the period from April 29, 1999 through and including June 25, 2002, and who were injured thereby” (the “Class Definition”). It gave a detailed Statement of Potential Outcome, which described the issues confronting the parties and the various risks involved in prosecuting the class claims against the settling defendants, and recounted the history of the litigation. It set forth the language of the Release to be imposed pursuant to the settlements and defined the Settling Defendant Releasees. Released Claims are defined as all claims and causes of action of every nature and description, known and unknown, whether under federal, state, common, or foreign law, whether brought directly or derivatively, based upon, arising out of, or relating in any way to investments (including, but not limited to, purchases, sales, exercises, and decisions to hold) in securities issued by WorldCom, including without limitation all claims arising out of or relating to any disclosures, public filings, registration statements or other statements by WorldCom, as well as all claims asserted by or that could have been asserted by Plaintiffs or any member of the Class in the Action against the Settling Defendant Releasees. (Emphasis supplied.) The Class Notice outlined the Underwriters’, Directors’, and Andersen Settlements, listing settlement dates and dollar amounts and setting forth the Plans of Allocation. It also specified the maximum amount of attorneys’ fees and costs that Lead Counsel would seek. It set a deadline of August 12, 2005 for any objections to the settlements and announced a September 9, 2005 fairness hearing (the “Fairness Hearing”). The Class Notice informed Class Members that they would receive no further mailing if settlements were reached with Ebbers, Sullivan, Myers, and/or Yates unless they submitted a request to the Claims Administrator for written notice of any additional settlements. Rather, notice of further settlements would be provided on www.world-comlitigation.com, the website maintained by Lead Counsel (“Lead Counsel Website”), and in several specified publications. This method of notice was approved in light of the fact that any settlement with the remaining defendants would not materially increase recovery for the Class, whereas another mailed notice would constitute a significant expenditure. The Supplemental Plan specifies the methodology for calculating a “Recognized Amount” for each Class Member’s losses, based on the type of security purchased and the date it was sold or redeemed. It also specifies that there will be no recovery for WorldCom securities sold or redeemed on or before January 28, 2002, explaining that the first decline in the price of WorldCom securities that could be said to be caused by WorldCom’s misrepresentation of its financial condition was a decline on or after January 29, 2002. The tables accompanying the Supplemental Plan lay out the dollar amount of artificial inflation inhering in the market price of each type of WorldCom security for each day of the Class Period, as estimated by the Lead Plaintiff. Ebbers Settlement The Lead Plaintiff reached a settlement with Ebbers on July 6, 2005 (the “Ebbers Settlement”). The settlement results in the surrender of substantially all of Eb-bers’ assets. Pursuant to the Ebbers Settlement, the Class will receive $5,636,543.69 in cash. The Class is also entitled to approximately 75% of the net proceeds from the sale of various assets held by Ebbers, including a house, several plots of land, certain farm equipment, and interests in various businesses, and will receive approximately two-thirds of the net proceeds from the sale of the Joshua Tim-berlands, another Ebbers asset. The balance of the proceeds from the sale of Ebbers’ assets will go to settle debts Eb-bers owes to MCI. The Lead Plaintiff estimates that the sale of Ebbers’ assets will result in an additional $18 million to $28 million of recovery for the Class. The Ebbers Settlement also includes a Confidential Supplemental Stipulation allowing Ebbers to retain a specified amount to pay legal bills, to fund his defense in other litigation, and to pay $450,000 owed on a note to the class plaintiffs in the World-Com ERISA Litigation. The Plan of Allocation for the Ebbers Settlement is identical to those proposed for the Directors’ and Andersen Settlements. Lead Counsel have chosen not to apply for any additional attorneys’ fees on the basis of the Ebbers Settlement. A hearing regarding preliminary approval of the Ebbers Settlement was held on July 11, and a Preliminary Approval Order was issued on the same date. Ebbers was indicted on criminal charges for his involvement in the WorldCom fraud on March 2, 2004; a jury convicted him of nine felony counts on March 15, 2005, after a trial before the Honorable Barbara S. Jones, U.S. District Judge for the Southern District of New York. In recognition of the Ebbers Settlement, the Office of the U.S. Attorney for the Southern District of New York (“U.S. Attorney’s Office”) agreed not to seek further monetary restitution from Ebbers. In addition, the New York State Attorney General agreed to dismiss certain claims against Ebbers that were pending in a New York state court. On July 13, Judge Jones sentenced Ebbers to twenty-five years in prison. Myers, Yates, and Sullivan Settlements On July 21, 2005, the Lead Plaintiff reached a settlement agreement with Myers and Yates (the “Myers-Yates Settlement”), embodied in a Stipulation of Settlement of July 26. It does not require either Myers or Yates to pay money to the Class, as the Lead Plaintiff determined that both defendants lack adequate financial resources and that the expense of further prosecution of the claims against those defendants would thus be detrimental to the Class. A settlement with Sullivan was announced on July 25, 2005 (the “Sullivan Settlement”). As was true for the Ebbers Settlement, the Sullivan Settlement results in the surrender of substantially all of Sullivan’s assets. Pursuant to the terms of the Stipulation of Settlement with Sullivan, dated July 26, 2005, the Class will receive 90% of Sullivan’s MCI 401(k) account, representing approximately $200,000. It will also receive approximately 90% of the net proceeds from the sale of a Boca Raton, Florida house owned by Sullivan. Five percent of the proceeds of the sale of the Boca Raton house will be held in escrow by Sullivan’s attorneys to fund his defense in other litigation, including the WorldCom Individual Actions. The balance of the proceeds from the 401(k) and the sale of the house will be distributed to the plaintiff class in the WorldCom ERISA Litigation. The sale of the Florida house is expected to result in a net payment of between $4 and $5 million to the Class. The Plan of Allocation for the Sullivan Settlement is identical to those for the Directors’ Settlement, Andersen, and Eb-bers Settlements. As with the Ebbers Settlement, Lead Counsel chose to forego any request for attorneys’ fees based on the Sullivan Settlement. Preliminary approval was given to the Sullivan and Myers-Yates Settlements in a hearing on July 28. Sullivan, Myers, and Yates had all pleaded guilty to criminal charges pending against them. In light of the Sullivan Settlement, the U.S. Attorney’s Office did not seek further monetary restitution from him. On August 9, Judge Jones sentenced Yates to a year and a day in prison, and the following day, Myers received a one-year sentence. On August 11, Sullivan was sentenced to five years in prison. Yates’, Myers’, and Sullivan’s sentences were significantly reduced because they had cooperated with the Government in its prosecution of Ebbers. Notice to the Class of the Ebbers, Myers-Yates, and Sullivan Settlements As provided in the Hearing Order, no notice of the Ebbers, Myers-Yates, and Sullivan Settlements (collectively, the “Officers’ Settlements”) was mailed to the Class. A Notice of Proposed Settlements of Class Action (“Officers’ Settlement Notice”) appeared through the channels prescribed by the Hearing Order. That document once again set forth the definition of the Class, described the Officers’ Settlements and the corresponding Plans of Allocation by claim, announced that the Officers’ Settlements would be considered at the previously scheduled September 9, 2005 Fairness Hearing, and informed Class Members of the sources from which they could receive previous Notices and proof of claim forms. As of the very end of August, only eighteen class members had contacted the Claims Administrator to request that a copy of the Officers’ Settlement Notice be mailed to them directly. Reaction of the Class to the 2005 Settlements Over four million putative Class Members were sent notice of the 2005 Settlements. Approximately 834,000 Class Members ultimately filed proofs of claim. Despite the significant participation of the Class in the claims process, only seven Class Members — a minuscule percentage — filed timely objections to the 2005 Settlements. Notably, the objectors did not attack the amounts obtained in the settlements; by and large, their objections addressed the scope of the Release and the provisions of the Supplemental Plan. The objectors are Roslyn Berger (“Berger”), who objects to the scope of the Release; Cerberus Partners, L.P., Cerberus International Ltd., Cerberus Institutional Partners, L.P. — Series Two, and Cerberus Institutional Partners America, L.P. (the “Cerberus Objectors”), who object to four aspects of the Supplemental Plan; Kenneth D. Laub (“Laub”), who objects to the Supplemental Plan; Cynthia R. Levin Moulton (“Moulton”), who objects to the Class Notice, the scope of the Release, and the Plans of Allocation; W. Caffey Norman, III, who objects to the Supplemental Plan; Richard F. Reynolds (“Reynolds”), who objects to the scope of the Release; and Charles Lee Thomason (“Thomason”), who objects to the format of the Proof of Claim Form. Their objections are discussed in detail below. Fairness Hearing The Fairness Hearing was held on September 9, 2005. Lead Counsel and counsel for additional Named Plaintiffs Fresno County Employees Retirement Association; the County of Fresno, California; and HGK Asset Management, Inc. appeared at the hearing, as did Alan P. Le-bowitz, General Counsel for the Comptroller of the State of New York, representing the NYSCRF; and Liaison Counsel for the Individual Actions. Also present were counsel for various Underwriter Defendants, the Citigroup Defendants, Andersen, various Director Defendants, and Eb-bers. The Cerberus Objectors, Laub, Moulton, Norman, and Reynolds were also represented by counsel at the Fairness Hearing; these objectors were all given the opportunity to be heard. Discussion Judicial Approval of Class Action Settlements Under Rule 23(e) Pursuant to Rule 23(e), Fed.R.Civ.P., any settlement of a class action must be approved by the court. The following discussion of the requirements of Rule 23(e) draws heavily from an October 18, 2004 Opinion approving a settlement in the WorldCom ERISA Litigation, see In re WorldCom ERISA Litig., No. 02 Civ. 4816(DLC), 2004 WL 2338151, at *5-*6 (S.D.N.Y. Oct.18, 2004), and from the November 12 Opinion approving the Citigroup Settlement, see WorldCom, 2004 WL 2591402, at *10. In determining whether to approve a class action settlement, the district court must “carefully scrutinize the settlement to ensure its fairness, adequacy and reasonableness, and that it was not a product of collusion.” D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir.2001) (citation omitted); see also Joel A. v. Giuliani, 218 F.3d 132, 138 (2d Cir.2000). In so doing, the court must “eschew any rubber stamp approval” yet simultaneously “stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case.” City of Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir.1974). A district court determines a settlement’s fairness “by examining the negotiating process leading up to the settlement as well as the settlement’s substantive terms.” D’Amato, 236 F.3d at 85. The court should analyze the negotiating process in light of “the experience of counsel, the vigor with which the case was prosecuted, and the coercion or collusion that may have marred the negotiations themselves.” Malchman v. Davis, 706 F.2d 426, 433 (2d Cir.1983) (citation omitted). A court must ensure that the settlement resulted from “arm’s-length negotiations” and that plaintiffs’ counsel engaged in the discovery “necessary to effective representation of the class’s interests.” D'Amato, 236 F.3d at 85. In evaluating the substantive fairness of a settlement, a district court must consider factors enumerated initially in Grinnell: (1) the complexity, expense and likely duration of the litigation, (2) the reaction of the class to the settlement, (3) the stage of the proceedings and the amount of discovery completed, (4) the risks of establishing liability, (5) the risks of establishing damages, (6) the risks of maintaining the class action through the trial, (7) the ability of the defendants to withstand a greater judgment, (8) the range of reasonableness of the settlement fund in light of the best possible recovery, [and] (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. D'Amato, 236 F.3d at 86 (citation omitted). Finally, public policy favors settlement, especially in the case of class actions. “There are weighty justifications, such as the reduction of litigation and related expenses, for the general policy favoring the settlement of litigation.” Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir.1982). Procedurally, not a modicum of doubt exists as to the fact that the 2005 Settlements were achieved after painstaking negotiations between extraordinarily well-represented adversaries. In addition, Lead Counsel attests that a thorough investigation of the financial status of the Director Defendants, Andersen, and the Officer Defendants was performed to assess what resources these defendants could contribute to their respective settlements. Substantively, consideration of the Grinnell factors strongly supports approval of the settlements. 1. Complexity, expense, and likely duration of the litigation The litigation was extraordinarily complex, and even though the Court made every effort to conduct the litigation as efficiently as possible, it was a costly undertaking for all parties, particularly given the late stages in which the 2005 Settlements were reached. Nevertheless, further litigation would have resulted in considerable additional expense. By settling when they did, all defendants but Andersen avoided the expense of conducting a full trial, and all parties avoided the expense of the nearly inevitable post-trial briefing and appeals. Particularly with respect to the less-wealthy defendants, further litigation would have only served to extinguish the funds available to settle the Class claims. 2. Reaction of the Class Out of some four million potential Class Members, more than 830,000 of whom submitted proofs of claim, only seven filed timely formal objections to the 2005 Settlements. The very low number of objections evidences the fairness of those settlements. See Grinnell, 495 F.2d at 462. 3. Stage of the proceedings and the risk of further litigation The Underwriters’ and Directors’ Settlements were accomplished on the eve of trial; the Andersen Settlement, after several weeks of trial, immediately preceding closing arguments; and the Officers’ Settlements, after those defendants had testified in the criminal case against Ebbers and after the Andersen trial had ceased. All parties were thus superbly equipped to evaluate the strengths and weaknesses of their cases. Even at these late stages of the litigation, however, there were significant risks on all sides, many of which were described in the Class Notice. With respect to both Securities Act and Exchange Act claims, the falsity of many alleged misstatements was in dispute. All active defendants facing Securities Act Section 11 claims stemming from the 2000 and 2001 Offerings had asserted due diligence defenses and might have been successful at establishing the adequacy of their efforts at trial. Active Section 11 defendants, with the exception of Andersen, might have been able to establish that no “red flags” put them on notice of wrongdoing and that they were thus entitled rely on World-Corn’s audited financial statements. Defendants facing Securities Act Section 12(a)(2) claims might have been able to establish that they exercised reasonable care. In addition, the Lead Plaintiff might not have been able to establish that Andersen and Kellett, who faced Exchange Act 10(b) claims, acted knowingly or recklessly with respect to the misstatements. See 15 U.S.C. § 78j; 17 C.F.R. § 240.10b-5. (Such a state of mind clearly existed on the part of the Officer Defendants, however, who were found guilty of or pleaded guilty to criminal charges.) The Director Defendants, all of whom faced liability under Exchange Act Section 20(a), might have been able to prove that they “acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.” 15 U.S.C. § 78t(a). The Director Defendants and Andersen also argued that their proportionate share of responsibility was minimal compared to the WorldCom insiders who perpetrated the fraud. In addition, with respect to both Securities Act and Exchange Act claims, the defendants contested the extent to which the decline in the prices of WorldCom securities was due to the WorldCom accounting fraud as opposed to other market forces. 4. The range of reasonableness of the settlement fund and the ability of defendants to withstand a greater judgment The 2005 Settlements are, in virtually each instance, of historic proportions. Purchasers of the WorldCom bonds issued in the 2000 and 2001 Offerings, who accordingly possessed Securities Act claims against all defendants, will recover approximately $4,852 billion — $3,452 billion from the present settlements, and $1.4 billion from the Citigroup Settlement. The bonds issued in the 2000 and 2001 Offerings were worth approximately $16.9 billion, of which $15.3 billion was still outstanding at the end of the Class Period, and Lead Plaintiffs damages model attributed some $10.6 billion of damages to the alleged misstatements in the Registration Statements for the offerings. The Lead Plaintiff estimates that the average recovery per $1000 face amount of the bonds issued in the 2000 and 2001 Offerings will be $426.66, based on the total funds recovered through the Citigroup Settlements and the 2005 Settlements, the number of bonds outstanding at the end of the Class Period, and the estimated amount of bonds held by persons who opted out of the Class. This recovery does not include the significant amount that bondholders have already recovered through the WorldCom bankruptcy proceedings. Given the risks that would have been inherent in proceeding with the trial and any appeals, the settlement amount that will be allocated to the Securities Act claims is more than reasonable; it is remarkable. The Underwriter Defendants obviously have the financial resources to pay more than they have, but the Underwriters’ Settlements have contributed to a total recovery that goes a long way toward making bondholders whole. Purchasers of other WorldCom securities stand to recoup a far smaller percentage of their losses. Even combined with the approximately $1.175 billion allocated to Exchange Act claims in the Citigroup Settlement, the funds received in the 2005 Settlements represent only a fraction of the recovery achieved for purchasers of bonds in the 2000 and 2001 Offerings. The only defendants involved in the 2005 Settlements who faced Exchange Act claims are Andersen, now defunct and retaining limited assets; the Director Defendants, who have collectively given up twenty percent of certain personal assets and whose settlements were supplemented by $36 million in contested insurance funds; and the Officer Defendants. Of the Officer Defendants, Ebbers and Sullivan have contributed substantially all of their personal assets to this and other settlements, and Yates and Myers are effectively insolvent. Thus, the pool of resources from which the Lead Plaintiff could seek recovery through this round of settlements for purchasers of stock and pre-existing bonds was relatively shallow, and because purchasers of stock and pre-existing bonds incurred aggregate losses many times greater than those of bond purchasers in the 2000 and 2001 Offerings, the recovered sums will be diffused much more widely. The Lead Plaintiff has included protections in the settlement agreements with the Exchange Act defendants providing recourse for the Class should these defendants’ financial representations be false. The Lead Plaintiff—who, it should be noted, was not a purchaser of bonds in the 2000 and 2001 Offerings and thus will recoup the same proportion of its losses as all other Class Members with only Exchange Act claims—estimates that Class Members will recover only an average of $0.56 per share of common stock. It has nonetheless still recovered a fair and, when the Citigroup Settlement is considered, even a remarkable amount for shareholders, given the circumstances. Objections by Class Members 1. Objection to the Class Notice The standard for measuring the adequacy of a settlement notice in a class action is reasonableness. Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 113 (2d Cir.2005). “There are no rigid rules to determine whether a settlement notice to the class satisfies constitutional or Rule 23(e) requirements; the settlement notice must fairly apprise the prospective members of the class of the terms of the proposed settlement and of the options that are open to them in connection with the proceedings.” Id. at 114 (citation omitted). “Notice is adequate if it may be understood by the average class member.” Id. (citation omitted). Moulton, who purchased a total of 54 shares of WorldCom stock during the Class Period, resulting in a loss of approximately $404, argues that the Class Notice was defective because the Class Definition is vague. Moulton did not file a proof of claim and therefore does not have standing to bring her objections. See State of New York by Vacco v. Reebok Int’l, Ltd., 96 F.3d 44, 47 (2d Cir.1996) (“For standing to exist, a would-be litigant must have sustained a palpable injury that is likely to be redressed by a favorable decision.”). In any event, Moulton’s objections are frivolous. Moulton contends that the phrase “who were injured thereby” necessitates “a subjective, merits-based inquiry far beyond a simple determination of whether a given person did or did not purchase or acquire WorldCom, Inc. securities during the class period,” rendering Class membership “unknowable.” She also argues in conclusory form and without explanation that the relief described in the Class Notice regarding the settlement is “vague and confusing.” Acknowledging that the 2005 Settlements achieved a “remarkable” recovery for the class, Moulton’s attorney elaborated on her objection at the Fairness Hearing, explaining that the Class Definition might be confusing to a person who had isolated losses but net gains from securities purchased during the Class Period, or who faced divergent results from purchases of different types of securities. A purchaser of WorldCom securities who believed that she had a legally cognizable injury attributable to those purchases would have been on notice that she was included in the Class. It is sufficient that the Class Definition gave putative Class Members who believed they had col-orable legal claims arising from purchases of WorldCom securities enough information to alert them that they needed to opt out of the Class if they wished to pursue their claims separately. Moulton’s objection based on the alleged vagueness of the Class Definition is accordingly rejected. Moulton’s objection to the description of the relief provided by the Class Notice must likewise be rejected. The Class Notice and the Executives’ Settlement Notice together listed the amounts of all of the 2005 Settlements. The Supplemental Plan describes in detail the allocation of the settlement proceeds among Class Members who filed proofs of claim. 2. Objections to the Scope of the Release Three Class Members, Berger, Reynolds, and Moulton, have objected to the scope of the Release to be imposed pursuant to the 2005 Settlements. As the Second Circuit recently noted, “Practically speaking, class action settlements simply will not occur if the parties cannot set definitive limits on defendants’ liability.” Visa, 396 F.3d at 106 (citation omitted). The scope of a settlement release is limited by the “identical factual predicate” and “adequacy of representation” doctrines. Id. “The law is well-established in this Circuit and others that class action releases may include claims not presented and even those which could not have been presented as long as the released conduct arises out of the ‘identical factual predicate’ as the settled conduct.” Id. at 107. “[A]dequate representation of a particular claim is determined by the alignment of interests of class members, not proof of vigorous pursuit of that claim.” Id. at 113. a. Berger Berger, who purchased 250 shares of WorldCom stock in 1998 and 100 shares on September 20, 2000, contends that the Release is overinclusive because it bars claims against settling defendants arising from the purchase of WorldCom securities prior to the Class Period, which began on April 29, 1999, and that Class Members were not given adequate notice that such claims would be barred. Berger, who has filed a Statement of Claim against SSB, one of the Citigroup Defendants, with the National Association of Securities Dealers (“NASD”), represents that she did not opt out of the Class because she did not believe claims arising from her 1998 purchases would be barred by the Release. Additionally, Berger argues that the 2005 Settlements do not provide adequate consideration for the release of claims arising from purchases made prior to the Class Period. To the extent that Berger objects to the Release imposed pursuant to the Citigroup Settlement, her objection is untimely and has been waived. Moreover, b