CWA Presses Federal Court to Delay Decision on WorldCom Settlement

Washington, D.C. -- The Communications Workers of America called the proposed $500 million partial settlement between WorldCom Inc., and the Securities and Exchange Commission "a slap on the wrist" for a company that committed the largest case of corporate fraud in U.S. history by misstating its earnings by at least $11 billion.

In public comments filed with U.S. District Court Judge Jed S. Rakoff, who is overseeing the settlement process, CWA stressed that the size of the civil penalty should be in the multi-billion-dollar range, to be commensurate with the size of the violation of the loss suffered by WorldCom's victims.

Investors lost $180 billion from WorldCom's fraud and bankruptcy. However, "the proposed $500 million penalty would allow WorldCom to emerge from bankruptcy with a cost structure and balance sheet that would provide significant competitive advantage to WorldCom over its competitors who did not commit serious securities violations," CWA wrote.

The victims of this corporate fraud are equity investors -- retirees and future retirees, private and public pension funds -- and workers throughout the telecom industry who lost jobs as WorldCom's fraud destabilized the industry, CWA pointed out, calling the settlement "woefully inadequate in light of the magnitude of the violations and the huge losses suffered by the victims."

CWA urged the court to move cautiously and postpone approval of the financial settlement since "the true size and extent of WorldCom's restated earnings is not yet known."

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