One U.S. lawmaker calls it just like the "accounting hocus-pocus" at Enron. Already mistrustful about corporate accounting in the aftermath
of the Enron scandal, they've been shaken again by news that
WorldCom disguised $3.8 billion dollars in expenses last year.
WorldCom is the largest private employer in Colorado Springs, with approximately 4,000 workers at the MCI Call Center on Corporate Drive, a software development center on Garden of the Gods Road anda sales and marketing office on Mark Dabling Road. In the past 3 months, there have already been some layoffs at the Springs facilities. This latest news could mean more workers are out of a job.
One analyst says WorldCom has taken ''a few giant leaps toward bankruptcy.'' And that could be just the start of its troubles. The Washington Post reports that the Justice Department has begun a criminal investigation.
The Securities and Exchange Commission is ordering the telecom
giant to file a detailed report of how nearly four (b) billion
dollars in expenses could have been hidden by executives.
The company's new management team announced Tuesday that they
discovered the expenses wrongly listed as capital expenditures. The
chief financial officer was immediately fired.
President Bush and congressional leaders are voicing outrage over the news. Lawmakers on both sides of the Capitol expressed disappointment with the Securities and Exchange Commission. Senator John McCain questioned whether the SEC can be effective under its chairman, Harvey Pitt. Pitt represented big Wall Street brokerages and major accounting firms as a private securities lawyer.
WorldCom, meanwhile, could be facing bankruptcy.
The latest accounting scandal has clearly been on the minds of investors -- who sent stocks plunging right at the opening bell this morning.
Although stocks pulled about even again by the end of the day --
analysts say that's just a result of computer-generated buying,
triggered by lower prices.
The Dow finished with a six-point loss. The Nasdaq composite
gained five, while the S-and-P 500 fell two and a-half points.
Denver-based Qwest Communications International's stock lost
more than half its value after news of another accounting scandal
hit Wall Street.
Shares of Qwest closed at a dollar-79 cents a share after
opening at two-dollars 40-cents a share on the New York Stock
Several telecommunication stocks closed lower after WorldCom
yesterday announced it had disguised nearly four billion
dollars in expenses last year.
The market is already mistrustful about corporate accounting
following the collapse of Enron Corporation and revelations of
bookkeeping irregularities at other companies.
Qwest Chairman and CEO Richard Notebaert issued a statement
saying the companies are different. He says Qwest will be able to
The Federal Reserve's widely expected decision to leave interest
rates unchanged had little effect on stocks.