Woeful WorldCom: 1.5B shares traded, fraud scope widens

NY DAILY NEWS ^ | 7/2/02 | NANCY DILLON, Daily News Business Writer

[Liz]

WorldCom investors flooded the Nasdaq yesterday, swapping a record 1.5 billion shares as bank loans went into default and the imperiled telecom said it was looking at more accounting fraud.

Indeed, bad news came calling from every direction on the No. 2 long distance provider — parent of MCI.

The Nasdaq said it plans to delist WorldCom shares Friday.

The Bush administration said it will explore whether the government should suspend all new business dealings with the company.

And WorldCom itself conceded it was officially in default of more than $4 billion in unsecured loans in a sworn statement to the Securities and Exchange Commission.

The company also said auditors are taking a closer look at its 1999 and 2000 balance sheets, checking on "certain material reversals of reserve accounts."

Having sought even more detail, SEC chairman Harvey Pitt blasted the statement as a simple chronology that was "wholly inadequate and incomplete. It demonstrates a lack of commitment to full disclosure to investors and less than full cooperation with the SEC."

The blistering volume of WorldCom trades on the Nasdaq yesterday more than doubled the previous record for a single day's dealings in a stock on any exchange. The last record, also WorldCom's, was 670 million shares traded May 14.

"It's mostly short sellers, but also some people buying on the hope that somehow the company gets itself straightened out," said Wilbur Ross, of investment firm W.L. Ross & Co.

Short sellers profit by betting on a stock's falling price.

WorldCom shares, halted from trading since Wednesday, plunged 77 cents to 6 cents a share, down precipitously from a 52-week high of $16.06.

Last Tuesday, WorldCom revealed a 15-month accounting fraud where $3.9 billion in expenses were improperly listed as investments, a trick that inflated cash flow.

The company now faces a criminal investigation by the Justice Department and is being sued for fraud by the SEC.

Already $30 billion in debt, WorldCom desperately needs more credit to meet looming payments. Yesterday's news does not bode well for this effort.

"It's clear to me there are more accounting issues yet to surface at WorldCom. And for bankers to loan a company more money, they would want to know what's there," said Drake Johnstone, telecom analyst at Davenport & Co. "Why throw more good money after bad?"

In many ways "it would be easier for them to operate under bankruptcy," Ross said. "They must have thousands and thousands of lenders, and bankruptcy is the only way to impose a solution on all of them."

WorldCom fired chief financial officer Scott Sullivan last week in connection with the fraud disclosure.

Next week, ousted CEO Bernie Ebbers and WorldCom's current CEO John Sidgmore are scheduled to appear before the House Financial Services Committee.

According to The Associated Press, Ebbers spoke briefly Sunday to members of his Baptist church in Mississippi, saying "No one will find me to have knowingly committed fraud."

[Liz]

.....Ebbers spoke briefly Sunday to members of his Baptist church in Mississippi, saying,
........"No one will find me to have knowingly committed fraud".........

So, in Clintonspeak, it was committed unknowingly?

[DB]

By him...

[TommyDale]

"No one will FIND me to have knowingly committed fraud."

Yes, Clinton-speak. No one will FIND him to have knowingly committed fraud, because the trail is covered well. Phrases such as "I don't recall" and "It depends on what the word 'IS' is" come to mind...

[PGalt]

I did not have sex with that woman, Miss Lewinsky, not one time...never

[AndyJackson]

At $.06 per share ol' Bernie's stock is still very expensive TP. It still has a way to drop.

[dtel]

"I don't recall"
"No controlling legal authority"
I can hear it all again.
Wonder if they ought to start taking up the passports of these fine upstanding businessmen.

[Liz]

At $.06 per share ol' Bernie's stock is still very expensive TP. It still has a way to drop.

LOL. Gotta really shake the kiddies piggy bank to come up with that kind of cash.

[Liz]

Kozlowski through Tyco bought back outstanding shares of TyCom and folded it back into Tyco, even changed all the signs on the buildings, just before it went bust and fired 90% of the workers. It did not make much news though but there is the matter of $3b that was not realized as revenue. This scandal is yet to be revealed.

Yeah, the old scam Koslowski's got nabbed on - sending empty boxes to your Connecticut address to avoid sales tax has been practiced by the Tiffany/Bloomy crowd for ages. There's bigger fish to fry here.

[Liz]

Wonder if they ought to start taking up the passports of these fine upstanding businessmen.

Yeah, these "fine upstanding pillars of the business community" might wanna take it on the lam.....

[SGCOS]

"Oh, did we say 5 QUARTERS of irregularities? HaHa, we meant 5 YEARS of irregularities..."

&^(

[Liz]

I did not have sex with that woman, Miss Lewinsky, not one time...never

"It all depends what the meaning of 'is' is."

[Liz]

"Oh, did we say 5 QUARTERS of irregularities? HaHa, we meant 5 YEARS of irregularities..."

Oh, that's a little ol' nothin'......only 5 YEARS.....tee hee.....

[dtel]

Yes, one Marc Rich comes to mind. OTOH, that pardon didn't seem to do him much good. LOL

[Liz]

Yes, one Marc Rich comes to mind............

It all seems such a far-off dream doesn't it? Until the Clintons rear their ugly heads.
Then reality hits. These two creeps really said and did all those horrible things.