Judge OKs WorldCom agreement
NEW YORK — A federal judge approved a partial settlement between WorldCom and federal regulators Tuesday that calls for an unspecified fine and continued government oversight of the telecommunications company.
The settlement, stemming from civil fraud charges related to the company’s $9 billion accounting scandal, includes a permanent injunction barring further violations of security laws, U.S. District Judge Jed Rakoff said.
The settlement also calls for the continuation of a court-appointed monitor for WorldCom, with the possibility of expanding the monitor’s role, Rakoff said.
The judge said WorldCom’s monetary penalty would be determined later.
WorldCom also agreed to hire an outside consultant to review its internal accounting controls, and provide mandatory accounting and ethics training for accounting employees for at least three years.
Rakoff said the company “has made laudable progress” since the charges were brought. Officials with WorldCom and the Securities and Exchange Commission declined to comment before the hearing.
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 already has 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 telecommunications giant. In their earlier pleas in Manhattan federal court, Myers and Yates said the orders to falsify WorldCom’s ledgers came from top levels of corporate management.
Former chief financial officer Scott Sullivan has been indicted, but has maintained his innocence.