Judge Approves $750 Million WorldCom Settlement

By Agence France-Presse A U.S. federal judge on July 7 approved a $750 million settlement between bankrupt telecom giant WorldCom Inc. and market regulators regarding the telecom giant's $11 billion accounting fraud. "The court is convinced . . . that the proposed settlement is not only fair and reasonable, but as good an outcome as anyone could reasonably expect," Judge Jed Rakoff said in his ruling. Approval of the settlement marks a significant step forward for WorldCom, renamed MCI earlier this year, as it seeks to emerge from bankruptcy. In deliberating on the settlement proposed by the Ashburn, Va.-based company and the Securities Exchange Commission, Rakoff said he had taken into account the wishes of some shareholders who felt WorldCom should be liquidated. The loss to WorldCom shareholders as a result of the fraud -- the biggest accounting scandal in corporate history -- has been estimated at around $200 billion. In his 14-page ruling, Rakoff said killing off the company was in nobody's best interest and would "unfairly penalize" its 50,000 innocent employees. He also argued recognition for WorldCom efforts to bring the company back onto the path of good corporate citizenship. "The court is aware of no large company accused of fraud that has so rapidly and so completely divorced itself from the misdeeds of the immediate past and undertaken such extraordinary steps to prevent such misdeeds in the future," he said. Copyright Agence France-Presse, 2003