it is a biggest financial scandal in Accounts of company in America. And these are some effects after thus scandal.

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