WASHINGTON — Thousands of investors injured by WorldCom Inc.'s $11 billion accounting fraud will soon receive their share of as much as $150 million in the first installment of payments from a special fund, the Securities and Exchange Commission said Friday.
WorldCom, which collapsed into bankruptcy in 2002, agreed in a settlement with the SEC the following year to pay a $750 million penalty — a small sum compared with the tens of billions of dollars of market value that evaporated in the largest corporate fraud in U.S. history.
The money went into a special fund for aggrieved investors from a number of corporate accounting failures when the telecom giant emerged from bankruptcy protection in April 2004 under the name MCI Inc.
Verizon Communications Inc. later bought MCI.
People in 110 countries made nearly 450,000 claims for restitution in the WorldCom distribution process, the SEC said.
The success of the process "will play an important role in encouraging investors to continue to place trust in America's capital markets," SEC Chairman Christopher Cox said in a statement. "It shows that even when things go terribly wrong, there is a safety net for injured investors."
A federal appeals court ruled early this month that the SEC had the authority to decide how to distribute the $750 million to investors who held WorldCom stock or bonds from April 1999 through the company's bankruptcy proceedings.
Former WorldCom chief executive Bernard Ebbers reported to prison in September to begin serving a 25-year sentence for his role in the audacious accounting fraud that toppled the company he built from a tiny telecommunications firm into an industry titan.
The special fund for investors, known as the Fair Fund, was established under the 2002 Sarbanes-Oxley anti-fraud law that was enacted in response to the wave of corporate scandals. Before 2002, civil penalties garnered in settlements with companies were paid to the U.S. Treasury and weren't available to aggrieved investors.
On the Net: Securities and Exchange Commission: www.sec.gov
WorldCom Victim Trust: www.worldcomvictimtrust.com