ArticleWorldComCNN

ArticleWorldComCNN - WorldCom's financial bomb From the...

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WorldCom's financial bomb From the president on down, officials worried about investor confidence weigh in. June 26, 2002: 9:21 PM EDT By Jake Ulick, CNN/Money Staff Writer NEW YORK (CNN/Money) - Confidence in Corporate America hit new lows Wednesday as President Bush, Congress and other federal regulators vowed to investigate WorldCom while securities analysts forecast bankruptcy for the latest firm to fool investors with inflated profits. WorldCom, which will downwardly restate financial results in one of the biggest accounting scandals in history, joins Enron, Global Crossing and Tyco International among the tarnished success stories of the 1990s. "No one blow is going to be terminal," said Pete Peterson, the chairman of Blackstone Group "But this is another very serious one. All this does is add to the increasing loss of confidence in our systems." Peterson leads a group of investors that includes the heads of TIAA-CREF, the big pension fund and Vanguard, the mutual fund company, that are drawing up corporate governance recommendations. Bush Wednesday promised a full investigation into WorldCom's accounting problems following word that the No 2 long-distance telephone provider improperly booked $3.8 billion over the past five quarters. The mis-accounting made earnings look better than they really were. "We will fully investigate and hold all people accountable for misleading not only shareholders but employees as well," said Bush, who called the news "outrageous." "Those entrusted with shareholders' money must strive for the highest of standards." Hours later, the SEC filed a civil lawsuit against WorldCom, charging the company with fraud. "We're seeking orders that will prevent any dissipation of assets or payouts to senior corporate officers past or present, and preventing any destruction of documents," SEC chairman Harvey Pitt said in New York. The Federal Communications Commission is also taking some steps in the scandal. FCC
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ArticleWorldComCNN - WorldCom's financial bomb From the...

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