The Regents - University of California | Office of The President

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reporting periods, WorldCom has a staggering loss rather than a profit as it had
reported.
4. The market’s reaction was immediate and devastating. Trading of
WorldCom’s stock was halted. Its market value plummeted to $2.7 billion from a
high of $125 billion in mid-1999. Its stock dropped to almost nothing. The
Securities and Exchange Commission (“SEC”) announced that WorldCom’s
“accounting proprieties [were] of unprecedented magnitude.”
5. On August 8, 2002, WorldCom announced that it had discovered an
additional $3.3 billion in improperly reported earnings for 1999, 2000, 2001 and
the first quarter of 2002 and that the company would be again restating its
financial statements for 2001 and the first quarter of 2002. WorldCom also
announced that it expected that it would record further write-offs of other assets,
including goodwill and other intangible assets which were currently recorded as
$50.6 billion.
6. On November 5, 2002, WorldCom announced that it will likely report
another $1.8 billion in fraudulent accounting as a result of further internal
investigations based upon past transactions.
7. Congress, the SEC, the United States Attorneys’ office, a Bankruptcy
Court examiner and others are investigating this fraud. Four WorldCom
executives have already pled guilty to securities charges and more pleas and/or
convictions are expected.
8. The impact of this financial fraud to The Regents has been enormous.
Between 1998 and 2000, it purchased 10.2 million shares of stock including
purchasing stock through defendant Salomon Smith Barney, Inc. on April 2, 1998,
April 17, 1998 and December 2, 1999 in reliance on Defendants’ representations.
They bought shares from other sources all based upon the false representations.
The Regents sold off all of its nearly worthless WorldCom holdings in June and
July 2002 - - taking a loss of more than $353 million.
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COMPLAINT