Scott Moritz
WorldCom emerged from a partial settlement with federal prosecutors firmly on track to present its reorganization plan this spring. Just four months after the failed telco made the biggest-ever Chapter 11 bankruptcy filing, WorldCom and the Securities and Exchange Commission laid out the latest developments in a Tuesday afternoon courthouse press conference. The company has escaped financial penalties for now, though prosecutors left the door open to fines when they make recommendations to the court this spring. WorldCom agreed to five key terms in the first-stage settlement with prosecutors. Under the agreement, the company:
Agreed to "accept for purposes of penalty" that it had committed accounting fraud by overstating $9 billion in costs. Of course, in accepting the settlement the company neither admits nor denies the fraud charges.
Agreed to continue to report to court-appointed monitor and former SEC chief Richard Breeden.
Agreed to hire a consultant who will recommend appropriate accounting safeguards.
Agreed to subject finance employees to three years of accounting and ethics training.
And agreed not to break securities laws ever again.
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