Biginsiders.org is a nonprofit that monitors corporate governance, insider trading, and business political influence  Home
 About
 Legal
 Search
 Contact
Tracking the proximity of price influencing events and insider trading.


Global Events
September 11
Federal Reserve Testimony
Election 2000
Global Energy
OPEC Meetings
California Energy Crisis

Company Events
Company Search
Trader Search
Defense Contracts
Drug Approvals
IPO Offer Dates
Earnings
Conference Calls
Broker Ratings
Stock Splits
Mergers & Acquisitions
Bankruptcies
Litigation Search

Securities Traders
Ken Lay
John Snow

Sectors
Healthcare Sector
High Technology
Energy Sector
Finance & Banking
Defense Industry
Chemical Sector
Agriculture
Big Media

Scandals
Enron
WorldCom
ImClone
Tyco
Adelphia
France Telecom

Indexes
Dow Jones Companies

Other
Tobacco Litigation
Venture Capital
Energy Task Force
Political Donors
Academia Network


Contact Us

WoldCom Scandal

Improper accounting and inflated profits of $9 billion led to it's collapse. This chronology is joined with insider trade.

WorldCom, Inc. (WCOM)
Chronology of Events

(choose date for trade)
oldest to newest   newest to oldest 		ticker for trade
in other company
2002-03-01: Cynthia Cooper, vice president of internal audit, hears that CFO Scott Sullivan has used reserves to boost profits (between 3/1-3/6)
2002-03-06: Ms. Cooper alerts audit committee. Mr. Sullivan backs down.
2002-03-11: WorldCom receives a request for information from the U.S. Securities and Exchange Commission relating to accounting procedures and loans to officers.
2002-04-03: WorldCom says it is cutting 3,700 jobs in the U.S. or 6 percent of WorldCom group's staff, 4 percent of WorldCom's overall work force.
2002-04-22: Standard & Poor's cuts WorldCom's long-term and short-term corporate credit ratings.
2002-04-23: Moody's Investors Service cuts WorldCom's long-term ratings. Fitch cuts the company's ratings, saying it expects WorldCom's revenue to deteriorate during 2002, with prospects for recovery in 2003 uncertain.
2002-04-30: WorldCom CEO Bernard Ebbers resigns amid slumping share prices and a SEC probe of the company's support of his personal loans. Vice Chairman John Sidgmore takes reins of company.
2002-05-09: Moody's cuts WorldCom's long-term debt ratings to junk status, citing the company's deteriorating operating performance, debt and expectations for further weakness.
2002-05-10: Standard & Poor's cuts WorldCom's credit rating to junk status.
2002-05-13: Standard & Poor's removes WorldCom from its S&P 500 Index.
2002-05-15: WorldCom says it would draw down a $2.65 billion bank credit line as it negotiates for a new $5 billion funding pact with its lenders.
2002-05-21: WorldCom says it will scrap dividend payments and eliminate its two tracking stocks, one that reflects its main Internet and data business and a second that reflects its residential long-distance telephone business.
2002-05-23: WorldCom secures $1.5 billion in new funding to replace a larger, $2 billion credit line.
2002-05-28: An auditor uncovers $500 million in fraudulent computer expenses.
2002-06-05: WorldCom says it will exit the wireless resale business and will cut jobs to reduce expenses and pare massive debts.
2002-06-17: Ms. Cooper confronts other WorldCom officials about the accounting problems.
2002-06-20: Ms. Cooper presents findings to WorldCom's board. Mr. Sullivan is later fired.
2002-06-25: WorldCom fires its chief financial officer after uncovering improper accounting of $3.8 billion in expenses that covered up a net loss for 2001 and the first quarter of 2002. The company also says it will cut 17,000 jobs, more than 20 percent of its work force.
2002-06-25: WorldCom announces it inflated its profits by $3.8 billion over previous five quarters.
2002-06-26: Securities and Exchange Commission files civil fraud charges against WorldCom and seeks an order to prevent the company from disposing of assets, destroying documents and making extraordinary payments to senior officers. Nasdaq market halts trading in its two tracking stocks, WorldCom Group (nasdaq: WCOM - news - people) and MCI Group (nasdaq: WCOM - news - people). Shares of WorldCom fell as low as 9 cents before the halt. The U.S. Justice Department says it is reviewing the matter.
2002-06-27: The U.S. House Financial Services Committee subpoenas top current and former WorldCom executives, Ebbers, Sidgmore and Sullivan, as well as Salomon Smith Barney analyst Jack Grubman to testify on July 8. The House Energy and Commerce Committee requests documents for its own probe.
2002-07-01: WorldCom says in a sworn statement to the SEC that its audit committee is reviewing its financial records for 1999 through 2001 regarding "certain material reversals of reserve accounts." The company receives notice from some of its lenders saying they could demand immediate repayment for defaulted loans. The company's shares are resumed on the Nasdaq, opening at about 8 cents. The Bush administration says it is reviewing existing government contracts with WorldCom and could deny the company new business.
2002-07-02: Sidgmore holds news conference, apologizing for the scandal and says WorldCom is working on funding proposals with its lenders to stave off bankruptcy. New York State comptroller files suit for losses in its pension funds.
2002-07-03: U.S. District Judge Jed Rakoff appoints former SEC Chairman Richard Breeden to prevent possible shredding of key documents and unwarranted payouts to top officers. Rakoff sets March 31 for WorldCom to go on trial for alleged fraud.
2002-07-08: Former WorldCom CEO Ebbers tells the U.S. House Financial Services Committee he did nothing wrong and refuses to answer questions. Ex-CFO Sullivan also refuses to testify. Salomon Smith Barney analyst Jack Grubman says he attended WorldCom board meetings but denied having inside information about the woes. Sidgmore blames Andersen and says turnaround plans are coming together, some of which include bankruptcy. WorldCom says in a revised statement filed with the SEC that Sullivan tried to delay an internal audit that discovered the transfers of expenses to capital spending accounts.
2002-07-09: Sidgmore says the company expects to decide within three weeks whether to pursue bankruptcy or some other financial reorganization and is seeking $3 billion in funding, less than the previously sought $5 billion.
2002-07-10: U.S. attorney in Mississippi is removed from investigation of WorldCom because of a conflict of interest and case is taken over by New York's U.S. attorney's office.
2002-07-11: WorldCom says it will not pay the $71 million second quarter dividend to shareholders of its MCI Group long-distance tracking stock.
2002-07-12: SEC wins a stay blocking WorldCom plans to convert MCI Group tracking stock into WorldCom stock for 10 business days while the agency reviews the conversion.
2002-07-15: Rep. Billy Tauzin says Congress interviews of witnesses indicate WorldCom's accounting errors may go back to 1999 and says company e-mails show efforts in March 2001 of top executives trying to manipulate earnings to meet Wall Street expectations. He also says company memos show executives had discussions in 2000 about accounting for expenses over a longer period of time than allowed.
2002-07-16: WorldCom lines up $2 billion in financing to keep operating if lenders force the company into bankruptcy protection, sources say. A lawsuit by 25 banks trying to limit WorldCom's use of $2.5 billion in loans was moved to federal court from state court. Three California pension funds sue WorldCom for allegedly misleading them about the company's financial health in a 2001 bond offering. WorldCom missed $79 million in interest payments, according to sources. FCC Chairman Michael Powell says he does not expect imminent service halts or disruptions by WorldCom.
2002-07-17: The company agrees to freeze some assets for 80 days in exchange for a temporary halt to legal efforts by a group of banks to recover $2.5 billion in loans.
2002-07-18: Sources say WorldCom plans to file for bankruptcy protection as early as July 21.
2002-07-21: WorldCom files for bankruptcy protection, listing some $107 billion in assets and $41 billion in debt, on a consolidated basis as of March 31, 2002. CEO Sidgmore says the company plans to emerge from protection within 9 to 12 months. The company will have access to up to $2 billion in funding but does not plan to tap all of it.
2002-07-29: WorldCom names two specialists from AlixPartners LLC to oversee its reorganization and straighten its finances. Gregory Rayburn was appointed chief restructuring officer and John Dubel was hired as chief financial officer.
2002-08-01: WorldCom's former CFO Scott Sullivan and former Controller David Myers are arrested for their role in the $3.85 billion accounting scandal. The two were charged in a seven-count complaint accusing them of securities fraud and filing false statements with the Securities and Exchange Commission.
2002-08-08: WorldCom discloses an additional $3.3 billion in improperly recorded earnings from 1999 through the first quarter of 2002, bringing the total of pre-tax income reductions announced to $7.69 billion. WorldCom says it will restate earnings for 2000 and that it may write off $50.6 billion of goodwill and other assets and reevaluate the value of its property, plant and equipment.
2002-08-28: A New York grand jury indicts former CFO Scott Sullivan, paving the way for a trial in Manhattan federal court. The jury also indicts former director of general accounting, Buford Yates. Simultaneously, the prosecutors file notices that they plan to file informations against WorldCom's former controller, David Myers and two other WorldCom directors.
2002-09-10: WorldCom Chief Executive Officer and President John Sidgmore, who took up the position less than five months ago, says he will step down as soon as a replacement is found. WorldCom also says it is on track to emerge from bankruptcy by the middle of 2003.