WorldCom Collapses: Largest Bankruptcy in U.S. History
WorldCom filed for Chapter 11 bankruptcy protection on July 21, 2002, with $107 billion in assets, making it the largest corporate collapse in American history at that time. The telecommunications giant had been inflating its profits by $11 billion through fraudulent accounting entries that reclassified operating expenses as capital investments. Internal auditor Cynthia Cooper discovered the fraud and reported it to the board after the company's external auditor, Arthur Andersen (already disgraced by the Enron scandal), missed it. CEO Bernard Ebbers was sentenced to 25 years in prison. The scandal, combined with Enron, directly led to the Sarbanes-Oxley Act, which imposed the strictest corporate accounting regulations since the 1930s.
July 21, 2002
24 years ago
Key Figures & Places
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