SEC Press press_release 6 KB 2,667 chars

Press Release: SEC Distributions to WorldCom Fraud Victims Top Half-Billion Dollar Mark

Release: 2007-118
Caption: Securities and Exchange Commission v. Christopher Cox, et al.

summary

The SEC distributed over $500 million to WorldCom investors victimized by a $11 billion accounting fraud between 1999 and 2002, with the remainder of a $750 million civil penalty expected to be paid out after court resolution, enabling historic investor restitution under Section 308 of the Sarbanes-Oxley Act.

paragraph

The SEC distributed over $500 million to victims of WorldCom’s $11 billion accounting fraud, which involved inflating assets and earnings across five fiscal quarters from 1999 to 2002. A $750 million civil penalty imposed on WorldCom in 2003 was placed into a Fair Fund under Section 308 of the Sarbanes-Oxley Act, allowing civil penalties to be returned to harmed investors rather than the U.S. Treasury. The distributions, overseen by Judge Jed S. Rakoff and administered by Richard C. Breeden, are expected to include the remaining $250 million after final resolution of contested claims.

narrative

The SEC announced in June 2007 that distributions to victims of WorldCom’s massive accounting fraud had surpassed $500 million, marking a major milestone in investor restitution. The fraud, uncovered in June 2002, involved $11 billion in improper accounting entries that inflated earnings and assets over five fiscal quarters from 1999 to 2002, leading to a $750 million civil penalty imposed on WorldCom in July 2003. Under Section 308 of the Sarbanes-Oxley Act of 2002, for the first time, civil penalties could be directed to harmed investors instead of the U.S. Treasury, enabling the creation of the WorldCom Fair Fund. The fund’s administration was entrusted to Richard C. Breeden, with judicial oversight by U.S. District Judge Jed S. Rakoff, and an additional $250 million was expected to be distributed later that year upon final resolution of contested claims. The effort was part of a broader SEC initiative that had returned nearly $2 billion to victims of securities fraud by 2007. Top executives, including CEO Bernard Ebbers, were criminally prosecuted, with Ebbers sentenced to 25 years in prison. This case set a precedent for investor compensation and demonstrated the SEC’s enhanced ability to deliver justice directly to those harmed by corporate fraud.

Enriched metadata

Scheme: accounting-fraud (100%)
Court: Southern District of New York
Outcome: settled
Civil penalty: $750,000,000

Classified accounting-fraud(confidence 100%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 80% / precision 48%. detection rule →

Extracted insights

Dollar amounts 4

$2.00B $2 billion ≥$1B
$750.00M $750 million $100M–$1B
$500.00M $500 million $100M–$1B
$250.00M $250 million $100M–$1B

Entities 12

person christopher cox
agency deputy director of sec's division of enforcement
court district court
person honorable jed s. rakoff
person peter h. bresnan
person richard c. breeden
agency sec chairman
agency sec fair fund
agency sec's distribution agent for worldcom fair fund
agency Securities and Exchange Commission
court worldcom fair fund as u.s. district court judge
company worldcom, inc.

Triples 13

SEC announced distributions from Fair Fund to WorldCom fraud victims surpassed $500 million
SEC Fair Fund distributed over $500 million to WorldCom investor victims
SEC returned nearly $2 billion to investor victims in last four years
Richard C. Breeden is SEC's distribution agent for WorldCom Fair Fund
Richard C. Breeden expects remaining $250 million from $750 million penalty to be distributed later in 2007
Honorable Jed S. Rakoff oversees WorldCom Fair Fund as U.S. District Court judge
Christopher Cox is SEC Chairman
Peter H. Bresnan is Deputy Director of SEC's Division of Enforcement
WorldCom, Inc. paid $750 million civil penalty in settlement
SEC sued WorldCom on June 26, 2002
WorldCom made misstatements on financial statements for five fiscal quarters
District Court entered final judgment ordering WorldCom to pay civil penalty in July 2003
Sarbanes-Oxley Act of 2002 gave SEC ability to seek court approval to distribute civil penalties to fraud victims

View original SEC press releasesec.gov

Extracted body text (2,667c)

SEC Distributions to WorldCom Fraud Victims Top Half-Billion Dollar Mark FOR IMMEDIATE RELEASE 2007-118 Washington, D.C., June 14, 2007 - The Securities and Exchange Commission announced today that distributions from its Fair Fund to investor victims of the WorldCom, Inc. accounting fraud have surpassed $500 million. "The distribution of over a half-billion dollars through the SEC's WorldCom Fair Fund marks an important milestone in our successful program to return monies to injured investors," said SEC Chairman Christopher Cox. "In the last four years, through this and other SEC distributions, the Commission has returned nearly $2 billion to investor victims. I anticipate substantial additional distributions to investors in the near future." Richard C. Breeden, the SEC's distribution agent for the Fair Fund, has advised the agency that he expects the remaining $250 million from the original $750 million penalty obtained in a settlement with the company to be distributed later this year upon final resolution by the Court of any contested claims. The WorldCom Fair Fund has been under the oversight of the Honorable Jed S. Rakoff of the U.S. District Court for the Southern District of New York. Peter H. Bresnan, Deputy Director the SEC's Division of Enforcement, said, "We are pleased that investors defrauded by WorldCom have received over a half-billion dollars from our Fair Fund. The distribution is an important chapter in our enforcement efforts against WorldCom and the individuals at the center of the massive fraud at that company." The WorldCom Fair Fund distribution was made pursuant to Section 308 of the Sarbanes-Oxley Act of 2002, which gave the SEC the ability to seek court approval to distribute civil money penalties along with disgorgement to victims of securities fraud. By law prior to 2002, all civil penalties obtained by the SEC in securities enforcement actions were deposited in the general fund of the U.S. Treasury. The Commission sued WorldCom on June 26, 2002, the day after the company disclosed it had made misstatements on its financial statements for the preceding five fiscal quarters. In July 2003, the District Court entered a final judgment ordering WorldCom to pay a civil penalty. Pursuant to the Commission's request, this penalty was placed in a Fair Fund for the benefit of WorldCom's investor victims. Questions regarding the WorldCom Fair Fund distribution may be directed to Richard Breeden, the fund's administrator, at WorldCom Victim Trust, P.O. Box 6979, Syracuse, NY 13217, or at www.worldcomvictimtrust.com. http://www.sec.gov/news/press/2007/2007-118.htm Home | Previous Page Modified: 06/14/2007

OCR text (2,667c · plain-text · 99% conf)