1. WorldCom:Corporate Fraud By B Ajay(dm-05-06) D karthik (dm-05-17) P Naresh (dm-05-42) P Raghavender (dm-05-47)

2. profile Huge telecommunications company Largest in the U.S. Held responsible for waking up it’s somewhat sluggish industry in the early 90’s Telecommunications giant Provided: Internet Services Long Distance and various other phone services for a cheaper price than competitors

3. Mergers and acquisitions 75 mergers and acquisitions of smaller companies. Bought competitor MCI. Attempted to buy Sprint in 2000. Anti-trust regulations wouldn’t allow Sprint acquisition

5. HOW ENDED On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection, the largest such filing in United States history. The company emerged from Chapter 11 bankruptcy in 2004 becoming MCI. On March 15, 2005 Bernard Ebbers (CEO) was found guilty of all charges and convicted on fraud, conspiracy and filing false documents with regulators. He was sentenced to 25 years in prison

6. impact Shareholders:$180b of shareholder value lost(based on peak stock price) Debt & prefered stock holders:$37.5b of debt and prefered stock value lost Company: $750m settelment have to pay to sec Employes: 57,000 employees lost there job Board of directors :12 directors agreed to pay 120

7. Why good managers made a bad ethical choices Believe that the activity is really”illegal Believe that it is in the individual’s or corporation’s best interest Believe that it will never be found out Believe that the company will condone actions that are taken in its interest and will protect the managers responsible

8. Board of Directors 12 Directors agreed to pay (out of pocket) a total of $25M to settle securities class action case Investment Bankers Settlement of securities class action case with banks: Citi Group $2.6B JP Morgan 2.0B B of A .5B Other .9B

9. SEC Action: Grubman an Soloman Brothers Securities Analyst fined $15M and banned for life from practice.