ipl-logo

What Is The Worldcom Sec Case

605 Words3 Pages

On 26th June 2002, the SEC has filed fraud charges against WorldCom. The SEC also filed a proposed settlement of claim for civil penalty on WorldCom in May 2003. The Commission has claimed that Worldcom practiced undisclosed and improper accounting and has misled their investors from at least as early as 1999, thus resulted in overstate of its income. The Oklahoma Attorney General filed charges against WorldCom and Ebbers for violating securities laws by providing investors with false financial information in August 2003. Ebbers pleaded not guilty, but he was found guilty by the SEC in March 2005 on all counts of conspiracy, securities fraud and filing false documents and was sentenced to 25 years in prison on 13th July 2005. He has been free on bail until results of his appeal were decided. The jury in the Manhattan trial held Ebbers responsible for fraudulent practices which leads to the biggest bankruptcy in US corporate history. Ebbers was also sued by MCI in July 2004 for the $341 million in personal loans. …show more content…

Sullivan. Sullivan was charged with involving in a fraudulent scheme to hide WorldCom’s poor financial performance. In March 2004, Sullivan pleaded guilty on the criminal chargers and decided to testify in criminal case against Ebbers in return for a reduced sentence of five years. He was the main witness of Ebbers’s prosecution and the only person who testified that he discussed the WorldCom fraud directly with Ebbers. Besides settling charges with the SEC, Sullivan also agreed to be suspended for a lifetime from being an officer of any publicly traded

Show More
Related
771 Words | 4 Pages

In 2002 the Securities Exchange Committee filed the suit against Adelphia Communications Corp and all the members listed previously. Adelphia owned several subsidiary companies and the first SEC suit against them is for hiding the liabilities of Adelphia in these companies. The second was for making false statements to deceive others such as Wall

Read More
1143 Words | 5 Pages

In 1988, at the age of 21, Minkow began serving his prison sentence for several counts of securities fraud, racketeering, money laundering, embezzlement, mail fraud, tax evasion and bank fraud. Minkow was later placed on a five year probation period and made to pay $26 million for damages. During the time that Minkow was sentenced, the U.S. District Court Judge, Dickran Tevrizian, stated that Minkow was, “a man without a conscience.” The Securities Exchange Commission later banned Barry Minkow from ever becoming an officer or director of a public company ever again. (Parloff,

Read More
765 Words | 4 Pages

Vick was also named in the indictment as being part of the execution of dogs by means of drowning and hanging (Seitel, 2014). Needless to say, sponsors did not need to wait for an innocent or guilty verdict from the courts. In the court of public opinion, Vick was guilty and no one wanted him representing their company or products. Vick would be found guilty and sentenced to 23 months in a federal prison. If that was not the worst thing that could happen to Vick, he filed bankruptcy in 2008.

Read More
452 Words | 2 Pages

Last year the Commision determined that the PCI certification didn 't demonstrate reasonable security in the case of an incident involving ID theft protection company LifeLock. The company was under order since 2010, when it settled a complaint about exaggerated advertising claims. LifeLock was ordered to pay $100 million in December in order to settle Federal Trade Commission contempt charges for violating the terms of the 2010 court order. Still, Ohlhausen claimed that the Commission lacked convincing evidence of a breach and thinks that the FTC approached the situation from the wrong angle.

Read More
743 Words | 3 Pages

The reason for the punishment is that he is an insider trader who has material information that is not disclosed to the public. He may have known the weaknesses of the team he managed. Other people did not understand them because they are not technically savvy in this

Read More
1068 Words | 5 Pages

Yates held a high position in WorldCom, whereas Vinson was simply the accountant. As the company controller and Vinson’s boss, Yates had the authority to fire Vinson, re-consider her promotion, and begin to dislike her if Vinson decided not to comply with the task. Additionally, Vinson does not question Sullivan’s authority. Since Sullivan was regarded as one of the top Chief Financial Officers (CFOs), Vinson rationalizes her decision by assuring herself that if Sullivan thought making misleading journal entries was okay, it must be the right way. Besides, Sullivan had the most expertise and knew the best financial plan for the company.

Read More
256 Words | 2 Pages

He was convicted for stealing an estimated estimated $25 million to $45 million from New York City taxpayers through political corruption. He was brought to justice by someone in his inner corruption circle spilling information to the New York Times. 2. Credit-Mobilier Scandal- Transcontinental

Read More
347 Words | 2 Pages

Ebbers was charged for fraud, conspiracy, and filing false documents. Bernard Ebbers turned Worldcom into the nation's second largest long distance telecommunications company. He did this through a series of rapid acquisitions that left his company in debt. Then his company admitted to improperly reporting $3.8

Read More
144 Words | 1 Pages

Of the six WorldCom employees convicted in the case, I believe CFO Scott Sullivan was the most responsible for the fraud. Mr. Sullivan was the Chief Financial Officer of WorldCom. He was the one attempting to intimidate Cynthia Cooper, WorldCom Vice President of Internal Audit, by threating to hold all promotions in internal audit department. He was also the one that became aggressive and hostile while reprimanding Ms. Cooper for discussing the findings of her audit with Arthur Andersen. He was the one that attempted to provide written justification for the fraudulent journal entries before the audit committee.

Read More
512 Words | 3 Pages

In 2002, WorldCom reinstated their financial statements for 2001. Shortly after that, WorldCom filed for bankruptcy. SEC investigated and found major improper accounting which included overstatement of costs by $958 million and understatement of costs by $7 billion. Unfortunately because of this, WorldCom faced charges of fraud and CFO Scott Sullivan was sentenced for 5 years, Controller David Myers was sentenced for 1 year and CEO Bernie Ebbers was sentenced for 25 years. Worldcom violated the revenue recognition principle by recording revenue entries with no support that the activity is valid.

Read More
902 Words | 4 Pages

1. What factors in the WorldCom case support the conclusion that CEO Bernie Ebbers Knew about the financial statement fraud? What factors support his defense that he did not know about the fraud? Bernie Ebbers Knew about the financial statement fraud because he was the one who encourage others to go into financial fraud because of the stock prices were going down, which was affecting his marginal loan. For that reason, he was trying to sell his stock, but the board of Directors lent him $341 million, along with 2% interest rate.

Read More
699 Words | 3 Pages

The list includes a series of businesspeople who committed bankruptcy fraud such as a case in St. Louis, Missouri, where Kenneth Hutchinson, owner of Third Eye Investments, plead guilty to bankruptcy fraud, and not disclosing the correct income and asset information (U.S. Attorney’s Office 1) . The case with all connect to back to the common types of bankruptcy and what type did the party file. Through the paper, readers should gain a better understanding of bankruptcy, and the white-collar crime schemes

Read More
911 Words | 4 Pages

Ebbers leadership style changed from ethical to unethical during the downturn of the stock market and the effects it had on WorldCom shares. Ebber leadership style created an environment that left for little room for error. During telecommunications stock downturns Ebber was unable to come up with a strategy that would turn things around. During the initial phases of the Commission investigation into WorldCom’s accounting practices, Ebber was questioned concerning several low-interest loans he acquired from the board of directors. Shortly after Ebber was forced out by outside board members.

Read More
757 Words | 4 Pages

He allegedly copied computer software, hacked into several networks and stole various private data, including 20,000 valid credit card information (Devitt,

Read More
2107 Words | 9 Pages

Background WorldCom, once known as one of the most powerful telecommunication organizations of the world, is now studied as a case of a fraudulent company that carried out unethical financial activities to cover its weakening position in the market. After some aggressive investment decisions, the company started to witness huge financial pressure. The management used various forged accounting entries to conceal its weakening position. Cynthia Cooper, Vice President Internal Audit, discovered the unethical activities and raised the issue with the management and relevant departments and received bitter responses. She carried out internal audits in her own capacity with her colleagues and compiled evidence against fraudulent activities.

Read More

More about What Is The Worldcom Sec Case

Related Topics

Open Document