Victims of WorldCom accounting fraud to receive first payments

Thousands of investors affected by WorldCom's $11-billion accounting fraud will soon receive their share of as much as $150 million in the first installment of payments from a special fund, a report from The Washington Post said.

The report said WorldCom, which collapsed into bankruptcy in 2002, agreed in a settlement with the Securities and Exchange Commission the following year to pay a $750-million penalty, a small sum compared with the tens of billions of dollars of market value that evaporated in one of the largest corporate frauds in US history.

The settlement money went into a special fund for aggrieved investors from a number of corporate accounting failures when the telecom company emerged from Chapter 11 bankruptcy protection in April 2004 under the name MCI Inc., which Verizon Communications later bought, the report said.

People in 110 countries had made close to 450,000 claims for restitution in the WorldCom distribution process, the report quoted the SEC as saying.

A federal appeals court ruled early this month that the SEC had the authority to decide how to distribute the $750 million to investors who held WorldCom stock or bonds from April 1999 through the company's bankruptcy proceedings, the report said.

The special fund for investors, known as the Fair Fund, was established under the 2002 Sarbanes-Oxley anti-fraud law that was enacted in response to the wave of corporate scandals, the report further said.

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