WorldCom Inc. cleared a major legal hurdle yesterday when a federal judge in New York approved a $750 million settlement that would resolve the Securities and Exchange Commission's fraud case against the nation's second-largest long-distance telephone company.
U.S. District Judge Jed S. Rakoff's decision still needs the approval of the federal bankruptcy court, which is expected to decide later this month whether to sign off on the settlement. Although the $750 million settlement is the largest civil penalty ever imposed by the SEC, WorldCom competitors say it doesn't go far enough to punish the company for an estimated $11 billion in improper accounting and phony profits reported during its go-go days from 1999 to 2001.
Rakoff's 13-page order is, in effect, a forceful defense of WorldCom's efforts to transform its operations in the year since the company filed for bankruptcy protection last July. "The Court is aware of no large company accused of fraud that has so rapidly and so completely divorced itself from the misdeeds of the immediate past and undertaken such extraordinary steps to prevent such misdeeds in the future," Rakoff wrote.
News source: TechNews - WorldCom Settlement Passes Key Judicial Test
