Feeds

US cracks down hard on WorldCom

Send in the clowns

  • alert
  • submit to reddit

Remote control for virtualized desktops

ComputerWire: IT Industry Intelligence

The US government declared its intention to haul WorldCom Inc company and its executives over the coals yesterday, with legislators issuing subpoenas against executives and the Securities and Exchange Commission charging the firm with fraud.

The attacks from Washington followed the Clinton, Mississippi-based carrier's announcement on Tuesday that its accounts for the last five quarters featured $3.8bn worth of mis-statements in what is being seen as the US' biggest financial scandal ever.

Yesterday, SEC chairman Harvey Pitt, said in a TV interview that the agency would seek "hard time for hard crime" when it came to "white collar" crime, pledging to make it "so unpleasant, so painful and so impossible" for perpetrators.

Pitt's firebrand comments came as the SEC confirmed it was charging the firm with fraud, saying the misstatements were intended to mislead investors and keep the company's earnings in line with Wall Street estimates. The SEC, amongst other things is seeking orders preventing WorldCom from destroying documentation, or making any extraordinary payments to current or former officers.

Pitt's comments were backed up by US treasury secretary, Paul O'Neill, who said in a TV interview that the executive and congress were considering legislation that would allow the SEC to seize funds of executives involved in corporate fraud cases. In the interview with ABC television, O'Neill said the aim was to ensure that "while these cases are being litigated the money doesn't flow away and can be redistributed to employees and shareholders." He added that CEOs should be held responsible for being aware of any information that could affect a company's value, and that they should face criminal prosecution if accounts are exposed as false.

Meanwhile, congress stated its intention to investigate the WorldCom debacle. The House Committee on Financial Services issued subpoenas to WorldCom executives, including CEO John Sidgmore, and former CEO Bernie Ebbers, ordering them to appear before it on July 8.

And if it felt like the WorldCom scandal is already becoming a circus, the clowns have certainly arrived. A slew of shareholder lawsuits were announced by law firms yesterday, with WorldCom, former CEO Bernie Ebbers and WorldCom's accountants, Arthur Andersen all being targeted.

© ComputerWire

Related stories

Bush, SEC gang up on WorldCom
Worldcom engulfed in $3.8bn accounting scandal

Remote control for virtualized desktops

More from The Register

next story
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
Assange™ slumps back on Ecuador's sofa after detention appeal binned
Swedish court rules there's 'great risk' WikiLeaker will dodge prosecution
NSA mass spying reform KILLED by US Senators
Democrats needed just TWO more votes to keep alive bill reining in some surveillance
'Internet Freedom Panel' to keep web overlord ICANN out of Russian hands – new proposal
Come back with our internet! cries Republican drawing up bill
prev story

Whitepapers

Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Designing and building an open ITOA architecture
Learn about a new IT data taxonomy defined by the four data sources of IT visibility: wire, machine, agent, and synthetic data sets.
How to determine if cloud backup is right for your servers
Two key factors, technical feasibility and TCO economics, that backup and IT operations managers should consider when assessing cloud backup.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?