WORLDCOM CASE Judge says he'll take hard look at settlement
NEW YORK (AP) -- A federal judge is promising close scrutiny of the $11 billion financial fraud at WorldCom Inc. before he'll approve a $500 million settlement the bankrupt telecommunications giant has reached with federal regulators.
U.S. District Judge Jed Rakoff of Manhattan said he wants to learn "much more of the defendant's seemingly massive fraud," who would benefit from the settlement and how the company has altered its business practices.
The fine announced Monday would be by far the largest the SEC has ever imposed. Rakoff, inviting comment on the proposed payout, plans another hearing June 11.
The settlement requires WorldCom to put $500 million into a fund for investors who were victimized by the company's fraud, though the exact process has yet to be determined. WorldCom's collapse and bankruptcy wiped out nearly $180 billion in shareholder wealth.
Under the deal, WorldCom neither admits nor denies the charges. The settlement actually calls for a $1.5 billion fine, but the amount would be reduced as part of the company's Chapter 11 bankruptcy case.