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SEC, WorldCom Ready Partial Settlement

Nov 26, 2002 | AP

WorldCom and federal regulators were scheduled to present a partial settlement Tuesday of civil fraud charges related to the telecommunications company's $9 billion accounting scandal, a source familiar with the case said.

The source, speaking on condition of anonymity, told The Associated Press that the proposed settlement would be discussed at an afternoon hearing before Manhattan federal judge Jed Rakoff.

Spokesmen for both the company and the Securities and Exchange Commission declined to comment.

The SEC has charged WorldCom with fraud for misleading investors by misstating and hiding expenses. WorldCom has admitted to at least $9 billion in erroneous accounting.

Four WorldCom executives have pleaded guilty to their roles in the accounting misstatements that plunged the telecommunications giant into bankruptcy.

Rakoff has already approved a settlement with two of those executives, former controller David Myers and former accounting executive Buford Yates.

WorldCom, whose MCI unit is the No. 2 U.S. long-distance company with 20 million customers, filed the largest bankruptcy in U.S. corporate history in July.

Myers and Yates are cooperating with the Manhattan U.S. attorney's office's probe of the $9 billion accounting fraud at the telecommunications giant.

In their earlier pleas in Manhattan federal court, Myers and Yates said the orders to falsify WorldCom's ledgers came from the top levels of corporate management.

Former chief financial officer Scott Sullivan has been indicted but has maintained his innocence in the case.

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