WorldCom, SEC Reach SettlementNov 27, 2002 | UPI
WorldCom Inc. has reached a settlement with the Securities and Exchange Commission, escaping any fines for the time being, and promising to mend its ways in a $9 billion accounting scandal.
The deal was "a model of what should be attempted in a case of this sort," said Judge Jed S. Rakoff, who approved the settlement, according to The New York Times in its Wednesday edition.
The Clinton, Miss.-based telecommunications giant agreed to set up training and monitoring so that it can avoid further accounting problems. WorldCom, which operates in more than 65 countries, is in bankruptcy proceedings after revealing it had misstated financial results by more than $9 billion.
WorldCom neither admitted nor denied the allegations against it.
Under the settlement approved Tuesday, the judge has the discretion to assess a fine or other civil penalties against WorldCom at a later point.
"The requirements of this agreement are squarely in line with steps we are already taking to restore public confidence in WorldCom," John W. Sidgmore, WorldCom president and CEO, said in a statement.
The company hopes to emerge from bankruptcy next year.
On Monday, the company's new CEO will step up to the plate, Michael D. Capellas, former president of Hewlett-Packard Co. His hiring was announced Nov. 15.
The Times reported that the settlement of the civil fraud case drew some criticism.
"When you're talking about the biggest bankruptcy in history, you'd think the SEC would be a little more thorough," Tom Schatz, president of Citizens Against Government Waste, told the Times. "What kind of example would this set if WorldCom is never fined for its actions?" Citizens Against Government Waste is a public interest group in Washington, D.C.
While the company has resolved the civil suit against it, legal action is still pending for several former top executives, including the former chief financial officer, Scott D. Sullivan. He was indicted on criminal fraud charges and has pleaded innocent.
Capellas will also hold the title of WorldCom chairman. Prior to joining HP when it acquired Compaq Computer for $19 billion, Capellas had been Compaq's chairman and CEO.
"I took this job because I am convinced that WorldCom has the assets, the customers and the people to regain a leadership role in this industry," Capellas said in a statement earlier this month.