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Former WorldCom Execs, SEC Reach Pact

November 15, 2002|From Times Wire Services

NEW YORK — A federal judge has approved a settlement between the Securities and Exchange Commission and two former WorldCom Inc. executives in connection with the company's multibillion-dollar accounting scandal.

Former WorldCom Controller David F. Myers and former accounting executive Buford Yates Jr. agreed to settle the SEC's civil lawsuit against them, according to papers signed Thursday by U.S. District Judge Jed Rakoff.

Both men had pleaded guilty to criminal charges in the case in exchange for leniency, and their side agreements with the SEC were expected.

Financial penalties were to be determined later, according to court papers.

WorldCom, whose MCI unit is the No. 2 U.S. long-distance company with 20 million customers, filed for Chapter 11 bankruptcy protection in July.

Myers and Yates are cooperating with the probe by the Manhattan U.S. attorney's office of the $9-billion accounting fraud at the telecommunications giant.

In their earlier pleas in U.S. District Court in Manhattan, Myers and Yates said the orders to falsify WorldCom's ledgers came from the top levels of corporate management.

Former Chief Financial Officer Scott D. Sullivan has been indicted but has maintained his innocence in the case.

The judge said at a hearing Wednesday that WorldCom was close to settling "portions, though not the entirety" of the SEC's claims against the company.

Separately, WorldCom was expected to name a new chief executive today, and former Hewlett-Packard Co. President Michael Capellas is the front-runner, sources familiar with the situation said Thursday.

Capellas resigned as HP president Monday.

Details of his compensation and contract were being hammered out this week, the sources said.

Associated Press and Reuters were used in compiling this report.

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