The Regents - University of California | Office of The President

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136. In June of 2002, the SEC sought civil injunctive relief against
WorldCom (the SEC amended its complaint on November 5, 2002), and on July 2,
2002, the federal court appointed a monitor to have oversight over all
compensation paid by WorldCom.
137. On July 8, 2002, the House Financial Services Committee held
hearings into the WorldCom scandal. Ebbers and Sullivan exercised their 5 th
Amendment right not to testify. Melvin Dick, former Andersen partner on the
WorldCom engagement, and Jack Grubman, Salomon analyst, did testify.
138. On July 21, 2002, WorldCom and almost all its United States
subsidiaries filed for bankruptcy. The bankruptcy court approved the appointment
of an examiner and Dick Thornburgh was appointed on August 6, 2002. He is
charged with investigating the fraud and filing reports with the court. His First
Interim Report was filed on November 8, 2002.
139. On July 29, 2002, WorldCom’s stock delisted from NASDAQ.
E. August 8, 2002 Announcement of Additional Restatement
140. On August 8, 2002, WorldCom announced an additional restatement
of its financial statements because it had improperly reported earnings of $3.3
billion for 1999, 2000, 2001 and the first quarter of 2002. The company’s Press
Release provided:
WorldCom, Inc. today announced that its ongoing internal
review of its financial statements has discovered an additional
$3.3 billion in improperly reported earnings before interest,
taxes, depreciation and amortization (EBITDA) for 1999, 2000,
2001 and first quarter 2002. This amount is in addition to the
previously reported $3.8 billion in overstated EBITDA in the
year 2001 and first quarter 2002. As a result, WorldCom
intends to restated its financial statements for 2001 and first
quarter 2000.
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COMPLAINT