World com scandal Effects on world
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The document discusses the impact of the Worldcom scandal on the telecommunications market, noting a 7% drop in 2002 and significant losses for investors and competitors like AT&T and Sprint. Worldcom's fraud led to its delisting from the NASDAQ, a decline in share prices for various telecom companies, and substantial losses for pension funds and shareholders. Overall, the scandal severely affected the reputation and financial stability of the telecommunications industry.
World com scandal Effects on world
- 1. MuhammadUmer M.Com University of Central Punjab Muhammad Umer (University of Central Punjab) Pakistan
- 2. Telecommunication Market dropped: After WorldCom scandal the telecommunication Market dropped 7% decreased in 2002. HGK Debt securities: HGK stands for Harris, Greenhouse, Kutzel & HGK Asset Management company in New Jersey. They purchased $130 million of the debt securities & lost it all in this case. Muhammad Umer (University of Central Punjab)Pakistan
- 3. Effect on Competitors: AT&T and Sprint are also telecommunication Companies and competitors of WorldCom & AT&T & Sprint take wrong Decisions to see accounting figure like firing of 20,000 employees and to maintain their position equal to WorldCom in the market they cut off their cost. Muhammad Umer (University of Central Punjab)Pakistan
- 4. Effect on Pension Fund Company: The New York State Common Retirement Fund is Largest public pension fund in the U.S & they collect local employees‟ retirement funds and invested $300 million in WorldCom and after this secadal the lost their Money. Muhammad Umer (University of Central Punjab)Pakistan
- 5. Effect on NASDAQ : After this fraud WorldCom was delisted from NESDAQ stock market. Stock Index of WorldCom in NASDAQ: Before Scandal: Index Year 5000 2000 After Scandal: Index Year 1500 2002 Muhammad Umer (University of Central Punjab)Pakistan
- 6. Effect on UUNet Company: UUNet is an Internet Provider company and it handles more than 40% of U.S internet traffic. In 1998 UUNet merged with WorldCom After this scandal less Attention has been given to WorldCom’s internet service, UUNet. Muhammad Umer (University of Central Punjab)Pakistan
- 7. Effect on share price of other companies: The share price of Nokia, Sony Ericsson, Vodafone and other telecommunication Companies declined. Muhammad Umer (University of Central Punjab)Pakistan
- 8. Growth Rate of Stock Market: Stock price was at a peak of $64.5 in 1999,after this scandal the stock price fell to $0.83 by July 21,2002. Effects on Holders and Lender: After this big scandal of WorldCom shareholders of WorldCom who invest in different stock markets found that their shares become worthless and vender suffer loss. Muhammad Umer (University of Central Punjab)Pakistan
- 9. The wall street fix. (2005). http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/ Zekany, K., Braun, L., & Warder, Z. (2004). Behind closed doors at WorldCom: 2001. Issues in Accounting Education, 19(1), 101-117 The laws that govern the securities industry.http://www.sec.gov/about/laws.shtml#sox2002 52 FDIC law, regulations, related acts - consumer protection. (2010). http://www.fdic.gov/regulations/laws/rules/6500-200.html Exchange hearing panel decision 03-72, citigroup global markets inc, salomon smith barney inc. Exchange hearing panel decision 03-72, citigroup global markets inc, salomon smith barney inc. (2003). Sidak, G. (2003). The failure of good intentions: The WorldCom fraud and the collapse of american telecommunications after deregulation. Yale Journal on Regulation. Smith, R., & Walter, I. (2006). Four years after enron: Assessing the financial-market regulatory cleanup. The Indepedent Review, XI(1), 53-66. Sadka, G. (2006). The economic consequences of accounting fraud in product markets: Theory and a case from the US telecommunications industry (WorldCom). 53 Muhammad Umer (University of Central Punjab)Pakistan