U.S. Securities and Exchange Commission
Litigation Release No. 18789 / July 23, 2004
Accounting and Auditing Enforcement Release No. 2059 / July 23, 2004
Federal District Court Approves Distribution Plan for SEC Penalty in WorldCom Case
Securities and Exchange Commission v. WorldCom, Inc., Civil Action No. 02-CV-4963 (SDNY) (JSR)
On July 19, 2004, United States District Judge Jed S. Rakoff issued an order approving the SEC's proposed plan for distributing to defrauded investors the penalty paid by WorldCom (now known as MCI) in the SEC's civil action against the company. The SEC obtained the civil penalty judgment pursuant to a settlement with WorldCom that was approved by Judge Rakoff on July 7, 2003. (Litigation Release No. 18219). WorldCom satisfied the penalty judgment in May 2004 by transferring $500 million in cash and 10 million shares of new MCI common stock to accounts set up pursuant to court order. The assets in these accounts will be distributed to investor victims of the company's fraud pursuant to the plan approved by the court and Section 308 (Fair Funds for Investors) of the Sarbanes-Oxley Act of 2002.
As previously announced, Richard C. Breeden, the court-appointed Distribution Agent and a former SEC Chairman, will supervise the distribution of the civil penalty, and J. Carter Beese, Jr., a former SEC Commissioner, will oversee the stock portion of the distribution fund.
The distribution plan and other information regarding the WorldCom matter are available on the Commission's website at www.sec.gov/spotlight.shtml.
Information about filing a claim under the distribution plan will be posted at a later date on the SEC's website at www.sec.gov as well as on MCI's website at www.MCI.com.