The Securities and Exchange Commission announced that thousands of individual investors who made financial claims in the wake of the $11 billion WorldCom accounting fraud will soon receive up to $150 million from an SEC fund set up to help compensate investors for their losses.
The SEC's ability to return penalty money directly to fraud victims is a new authority granted under the Sarbanes-Oxley Act. The entire $750 million penalty that the SEC obtained from WorldCom was paid into a "Fair Fund" when the reorganized company emerged from bankruptcy protection in April 2004. All of that money is earmarked for return to injured investors.
During the period covered by the fraud, WorldCom had 34 different publicly traded securities, and over 32 billion shares of its common stock were traded. Investors in 110 countries made nearly 450,000 claims to the Fair Fund -- in 10 languages -- related to approximately 9.4 million transactions in those securities. The initial $150 million distribution approved by the court covers claims processed to date, including most of those filed by individual investors. Subsequent distributions will be made as the remaining claims are processed.
Former WorldCom chief executive Bernard L. Ebbers reported to prison last month to begin serving a 25-year sentence for his role in the fraud. Worldcom emerged from bankruptcy protection in April 2004 under the name MCI Inc., and was later bought by Verizon Communications Inc.
More information on the investor funds is available at www.worldcomvictimtrust.com.
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