Long Distance and various other phone services for a cheaper price than competitors.</li></ul>3<br />
WorldCom’sAscension<br /><ul><li>WorldCom took the telecom industry by storm when it began a frenzy of acquisitions in the 1990s.
From 1995 until 2000, WorldCom purchased over sixty other telecom firms. In 1997 it bought MCI for $37 billion.
WorldCom moved into Internet and data communications, handling 50 percent of all United States Internet traffic and 50 percent of all e-mails worldwide.
By 2001, WorldCom owned one-third of all data cables in the United States. In addition, they were the second-largest long distance carrier in 1998 and 2002.</li></ul>4<br />
THE SCANDAL<br />They classified over $3.8billion in payments for line costs as capital expenditures rather than current expenses.<br />Irregularities in the reserve accounts. <br />SEC claims that the total for fraudulent accounting comes to $9 billion dollars.<br />5<br />
WorldCom’s fall<br />The company began to fall in 1999 with massive lay offs and the steady decline of it’s stock price.<br /> Stock prices for WorldCom were around 60 dollars and dropped to pennies in 2002 giving sleepless nights to investors.<br />Business sector mergers were unsuccessful.<br />6<br />
The stock price had fallen from around 60$ in 1999 to $1 in 2002 <br />7<br />
Upper Management<br /><ul><li>Chief Financial Officer Scott Sullivan and Controller David Myers arrested.
Myer’s pleads guilty to three counts of conspiracy
Chief Executive John W. Sidgmore steps aside from his post
Buford Yates Jr. pleads guilty to two counts of securities fraud and conspiracy
Betty L. Vinson and M. Normand, former finance officials, are charged with conspiracy.
Six other WorldCom directors resign on December 18th</li></ul>8<br />
Government Involvement<br /><ul><li>Despite conspiracy charges and uncovered financial fraud the government still keeps WorldCom’s eligibility to file for bankruptcy.
The U.S. gives $2 billion dollars in assets to tap.
$20 million dollars over the span of three years given to new CEO
WorldCom still allowed to oversee government projects</li></ul>9<br />
Impact<br /><ul><li>Overall investor distrust with companies undergoing similar problems.
National feeling that the stock market is not as safe as previously thought.
SEC forced to keep a closer look on auditor and accountant dealings.</li></ul>10<br />
Post-Fraud Happenings<br /><ul><li>WorldCom was renamed MCI in 2004 when it emerged from bankruptcy.
Company could spin off several business units.
Added additional board members to serve on a special investigative panel to review accounting practices.
WorldCom may write off $50.6 billion in intangible assets.
17,000 jobs cut to save $1 billion.</li></ul>11<br />
CONCLUSION<br />In a way this proves some of the negligence of the government. With so much financial fraud going on at the time in huge multi-billion dollar corporations, investors would have suspected a little better job at finding problems in the system. Accounting practices like these not only install distrust in financial institutions but also in government factions like the SEC that were created and funded for the sole purpose of preventing things like this from happening.<br />12<br />