WorldCom will pay $500 million to settle securities charges it fraudulently accounted for about $11 billion and an announcement is expected later today.
The Securities and Exchange Commission had charged last June that the second biggest US long-distance telephone and Internet data company manipulated financial records, including improperly accounting for capital spending, at least as far back as 1999 to meet Wall Street expectations.
The settlement, which is one of the largest imposed by the SEC, would still need approval by a federal judge. US District Judge Jed Rakoff in New York, who is overseeing the WorldCom Case, has scheduled a 3 p.m. hearing (local time).
Settling the SEC charges would remove a big legal cloud over WorldCom, which filed for bankruptcy in July of last year after being rocked by the accounting scandal and amassing some $41 billion in debt. It still faces numerous shareholder lawsuits.
The SEC and WorldCom reached a partial settlement of the fraud charges last November, but left to be decided for another day the size of the penalty. The company neither admitted nor denied wrongdoing in the initial settlement.
Federal prosecutors and securities regulators have also filed fraud charges against WorldCom's former chief financial officer Mr Scott Sullivan, who has denied wrongdoing. Former Chief Executive Officer Mr Bernie Ebbers is under investigation, but has not been charged.