The Securities and Exchange Commission has announced that a cash pot
established to pay out damages has returned $500m (£254m) to
SEC Chairman Christopher Cox said: ‘The distribution of over a half-billion
dollars through the SEC’s WorldCom
marks an important milestone in our successful program to return monies to
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
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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