WorldCom has agreed to pay investors a record $500 million to settle civil fraud charges over its $11 billion accounting scandal.
The fine would be the largest the Securities and Exchange Commission (SEC) has ever imposed in connection with a financial fraud.
WorldCom, a bankrupt telecommunications titan that wants to be renamed MCI, is accused of falsifying balance sheets to hide expenses and inflate earnings.
Lawyers for the two sides presented the proposed settlement to US District Judge Jed Rakoff in New York City, who said he would consider the deal and would not rule before June 11th.
Judge Rakoff said he needs to learn "much more of the defendant's seemingly massive fraud", who would be affected by the settlement and what internal controls WorldCom has put in place.
The settlement calls for WorldCom to be fined $1.51 billion, an amount that would be reduced to $500 million as part of the company's bankruptcy case, in which many creditors have to settle for less money than they are really owed.
Even so, the figure would dwarf the $10 million fine the SEC levied on Xerox in 2002 to settle accounting charges and the $7 million paid by Arthur Andersen in June 2001 over its audit of Waste Management.
The SEC and WorldCom had been negotiating the settlement for months, and the deal would be an important development for WorldCom's hopes of emerging from bankruptcy as early as September.
AP