On July 7, 2003, United States District Judge Jed S. Rakoff approved the SEC's settlement with WorldCom (now known as MCI, Inc.). As part of the settlement, WorldCom has transferred $500 million in cash and 10 million shares of new MCI common stock to an escrow fund that the Court established.
On November 7, 2003, the Court appointed former SEC Chairman Richard C. Breeden as Distribution Agent and former SEC Commissioner J. Carter Beese, Jr. as Equity Manager to oversee the distribution of the escrow fund to eligible investors who were harmed by WorldCom's fraud. On July 19, 2004, the Court approved the SEC's plan for distributing the fund.
It will take time both to determine who is eligible to receive compensation and to distribute the securities and the cash. In the meantime, we have provided below answers to commonly asked questions concerning the WorldCom settlement.
I lost money, how do I know if I am eligible?
To participate in the distribution, you must have incurred a net loss from the combined purchases or sales of eligible securities (listed in Appendix 2 of the distribution plan) during the period of WorldCom's fraud (April 29, 1999 to June 25, 2002). Additionally, you must have held the securities at the close of markets on June 25, 2002. See paragraphs 13, 14, and 15 of the distribution plan for full details.
I believe I am eligible to receive a distribution, how do I file a claim?
There is nothing for you to do at this time if you believe you are eligible to receive a distribution.
In mid-October 2004, the Distribution Agent will publish a notice that will provide detailed information about eligibility criteria and the process for submitting a claim. This information will be posted on the MCI website.
In mid-November 2004, the Distribution Agent will mail a claims packet to all investors who can be identified as owners of WorldCom securities on June 25, 2002. Claims packets will also be available in downloadable form on the MCI website.
We will update this web page with further information concerning the claims process when the claims form becomes available.
If I am an eligible claimant, when will I receive my compensation?
There is no date set for payment. The distribution plan requires all claims to be submitted by July 19, 2005. The Distribution Agent will then have 120 days to review all claims and determine the amount of compensation that each claimant is eligible to receive. The Distribution Agent will send a notice to each claimant showing the amount he or she can expect to receive.
The distribution plan includes procedures to handle disputes with the Distribution Agent's decisions. All disputed claims must be resolved before any payments can be made.
For more information about the SEC's action against WorldCom, please visit our Spotlight on WorldCom. There you can find litigation releases, court orders, and a report by Richard C. Breeden.