The Securities and Exchange Commission on Tuesday expanded its charges against WorldCom, filing an amended complaint that adds a fraud charge, two new charges and expands the timeframe of the allegations.
The move was made with WorldCom’s consent and comes as the two sides move nearer to a settlement. No announcement of a deal is expected this week, people close to the talks said. Any settlement would include injunctions and probable financial penalties. The people said it would not include a dismissal of fraud charges, as some speculated.
WorldCom misled investors, the SEC now says, from at least as early as 1999 until the first quarter of 2002. The company has acknowledged, the SEC says, that during that period, “as a result of undisclosed and improper accounting”, it overstated the income it reported on its financial statements by approximately $9bn.
The SEC’s first complaint was filed in June, the day after WorldCom announced it intended to restate its financial results for the five quarters from 2001 to the first quarter of this year.