U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19301 / July 13, 2005
Accounting and Auditing Enforcement
Release No. 2277 / July 13, 2005
U.S. Securities and Exchange Commission v. Bernard J. Ebbers, Civil Action No. 05 Civ. 6378 (S.D.N.Y.)
SEC FILES CIVIL FRAUD ACTION AGAINST BERNARD J. EBBERS, WORLDCOM'S FORMER CHIEF EXECUTIVE OFFICER; EBBERS CONSENTS TO FRAUD INJUNCTION, PERMANENT OFFICER AND DIRECTOR BAR
Today the Securities and Exchange Commission filed a civil fraud action against Bernard J. Ebbers, the former Chief Executive Officer of WorldCom, Inc. (now known as MCI, Inc.), for his role in the WorldCom fraud. Ebbers has agreed to settle the matter by consenting, without admitting or denying the allegations in the Commission's complaint, to the entry of a final judgment enjoining him from violating the anti-fraud and other provisions of the federal securities laws, and permanently barring him from serving as an officer or director of a public company. The settlement is subject to the approval of the Court.
The Commission's action against Ebbers is its sixth civil enforcement action related to the WorldCom fraud. The complaint filed today alleges that Ebbers, along with other WorldCom senior officers, caused numerous fraudulent adjustments and entries in WorldCom's books and records, often in the hundreds of millions of dollars, in furtherance of a scheme to make the Company's publicly reported financial results appear to meet Wall Street's expectations. The complaint further alleges that these market expectations were based, in some instances, on financial performance targets set by Ebbers that Ebbers knew could not be attained by legitimate means. In addition, the Commission alleged that Ebbers made numerous false and misleading public statements about WorldCom's financial condition and performance, and signed multiple SEC filings that contained false and misleading material information.
If the settlement is approved by the Court, Ebbers will be enjoined from future violations of the antifraud, reporting, books and records, internal controls, and lying-to-auditors provisions of the federal securities laws-Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1 and 13b2-2 thereunder.
The Commission acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation. As announced on June 30 by the United States Attorney's Office, which obtained Ebbers' conviction on March 15 of this year, and as preliminarily approved on July 11 by U. S. District Judge Denise Cote, Ebbers will be required to transfer substantially all of his assets either directly to the class in the private WorldCom Securities Class Action Litigation or to a liquidation trust that will be established to sell off his assets for the benefit of that class and WorldCom. Ebbers is scheduled to be sentenced today in Manhattan by U.S. District Judge Barbara Jones.
The Commission's investigation into matters related to the WorldCom financial fraud is continuing.
SEC Complaint in this matter