WorldCom, SEC agree to settlement
- 28 November, 2002 10:11
Bankrupt telecommunications carrier WorldCom has entered into a settlement with the US Securities and Exchange Commission (SEC) civil lawsuit over its accounting practices, agreeing to a permanent injunction.
In the agreement, approved in the US District Court for the Southern District of New York, the company neither admits nor denies the SEC's allegations of fraud, according to a company statement.
The SEC or the court still may seek a future civil penalty to be paid by WorldCom, or further equitable relief or sanctions.
WorldCom, which in July filed for protection under Chapter 11 of the US Bankruptcy Code, is mired in a US$9 billion accounting scandal. Allegations of improper accounting at the company have brought shareholder lawsuits and Congressional investigations in addition to the SEC's civil suit.
Tuesday's injunction requires WorldCom to do the following things:
- Not violate securities laws in the future.
- Provide education and training for senior operational officers and financial reporting staff to prevent future accounting problems.
- Retain a consultant to review the effectiveness of WorldCom's accounting controls and policies.
- Have the Corporate Monitor in the case review the adequacy and effectiveness of the company's corporate governance and ethics policies.