The Securities and Exchange Commission has announced that a cash pot established to pay out damages has returned $500m (£254m) to WorldCom investors.
SEC Chairman Christopher Cox said: 'The distribution of over a half-billion dollars through the SEC’s WorldCom Fair Fund marks an important milestone in our successful program to return monies to injured investors,'
The Fair Fund was set up after the SEC successfully sued WorldCom on June 26, 2002, the day after the company disclosed it had made misstatements on its financial statements for the preceding five fiscal quarters. In July 2003, the District Court entered a final judgment ordering WorldCom to pay a civil penalty which amounted to $750m.
Section 308 of the Sarbanes-Oxley Act gave the SEC the ability to seek court approval to distribute civil money penalties along with disgorgement to victims of securities fraud. Before 2002, all civil penalties obtained by the SEC in securities enforcement actions were deposited in the general fund of the US Treasury.
Richard C Breeden, the SEC’s distribution agent for the Fair Fund, has said that he expects the remaining $250m of the original $750m penalty obtained in a settlement with the company to be distributed later this year upon final resolution by the US District Court judges of any contested claims.
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