MCI Aims to Make WorldCom History


The Securities & Exchange Commission and MCI Inc. (formerly WorldCom Inc.) will soon settle the largest securities fraud case in history, according to sources with knowledge of the matter. BusinessWeek Online has learned that the settlement could come as early as Monday, May 19.

The sources declined to specify the settlement's terms. But it's certain to break new ground, if only because of the sheer scale of WorldCom's acknowledged error: It wrongly claimed $9 billion in expenses as capital expenditures, and the figure could go as high as $11 billion, according to knowledgeable sources. That alleged deception inflated WorldCom's earnings by postponing those costs, which under accounting rules should have been deducted from income immediately.

MCI spokesperson Claire Hassett declined to comment on the possibility of a settlement. But with new management, abandonment of the WorldCom name, and a move of corporate headquarters from Mississippi to Washington's Virginia suburbs, MCI clearly is trying to put the accounting debacle behind it as quickly as possible.

THE BIGGEST MESS? The settlement is likely to cement a new SEC policy of dealing harshly with c


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