Wednesday, July 13, 2005

Bernard Ebbers, founder and former CEO of telecommunications giant WorldCom, now MCI, was sentenced to 25 years in prison for his role in the corporate accounting fraud totaling US$11 billion. The once-powerful company plunged into bankruptcy in July 2002.

The sentence was handed down by Manhattan federal court Judge Barbara S. Jones. Mr. Ebbers, who is 63, asked for a lenient sentence due to his failing health and a heart condition, and because of his philanthropy.

Prosecutors pushed for a life sentence, and said the sentencing “should prove to be a deterrent” to corporate wrongdoing. “The enormity of the crimes that Ebbers committed cannot be overstated: the fraud at WorldCom was the largest securities fraud in history,” prosecutors wrote in papers filed last month.

Jones rejected defense lawyers’ contentions that the government overstated the losses, and that Ebbers was not a mastermind of the wrongdoing. Jones believed Ebbers deserved a harsh sentence, and said “Mr. Ebbers was the instigator of the fraud.”.

Ebbers appeared to be tense when arriving at the court and even shoved a photographer out of his way. After the sentence was given, Ebbers was seen weeping. His first day of prison will be October 12.

In March, Ebbers was found guilty of fraud, conspiracy, and seven counts of filing false documents with regulators.

WorldCom emerged from bankruptcy last year under the name MCI, which was one of the many companies WorldCom had acquired. In May, Verizon agreed to acquire the company.

Thursday, March 5, 2009

US stock markets dropped to twelve-year lows on Thursday, amidst falling confidence in the financial sector and worries over whether the US automobile manufacturer General Motors will be able to keep operating.

The Dow Jones Industrial Average dropped by 4.08%, or 280.52 points, at the closing bell, reaching a level of 6595.32, a new 12-year low. The Nasdaq Composite lost 54.15 points, or 4%, to 1299.59, while the Standard & Poor’s 500 plunged by 30.27 points, or 4.25%, closing at 682.60.

Every stock in the Dow Jones, other than Wal-Mart, either lost ground or remained even, and all stocks in the S&P 500 index lost ground.

General Motors’ shares lost 15.5% after the auto firm announced that its auditors had “substantial doubt” over whether it would be able to keep operating.

Shares of financial companies were lower by nine percent, with Bank of America losing 11.7% and Citigroup falling by 9.7%.

“What’s most worrisome is that we haven’t hit the crescendo yet,” said Bill Groeneveld, the head trader for vFinance Investments. “Asset-management divisions are getting calls to just liquidate everything, and we haven’t seen the big players come back in at all.”

“This is one of the worst bear markets in the last 100 years; it started out with the credit crisis and the subprime [loans], but it is like a forest fire that has raced across the clearing and ignited other parts: Autos, auto parts, the insurance companies have been hit very hard. The credit crisis is causing an unraveling of industry after industry because the banks don’t lend,” said David Dreman, the chief investment officer of Dreman Value Management.

European markets were also lower today, with the London’s FTSE index losing 3.2% and the DAX index of Germany falling by five percent.