SEC Initiates Probe Of WorldCom

WorldCom

The informal inquiry seeks documents related to loans that WorldCom made to company officers since Jan. 1, 1999. The probe also focuses on a $685 million pretax charge in 2000 for domestic and global wholesale accounts that aren't collectible due to bankruptcies, litigation and contract dispute settlements.

The SEC's wide-ranging inquiry of WorldCom includes 21 separate requests for documents in such areas as customer-service contracts, customer billing, and policy for accounting and reporting for goodwill since January 1999. In addition, the investigation seeks information on problems with the integration of WorldCom's and MCI's computer systems.

News of the SEC probe sent WorldCom's stock down to $7.81 by midafternoon from a previous close of $9.01. Merrill Lynch downgraded the company's intermediate term rating to neutral from buy.

WorldCom is the second telecommunications company this week to report that the SEC had launched an accounting inquiry. On Monday, Qwest Communications International said it has received an SEC request for information on its accounting policies, practices and procedures in 2000 and 2001.