What Effects Did The Class Action Suit Against WorldCom Have?

If you were around in the past few years, then the odds are pretty high that you have heard something about the WorldCom accounting scandal.

This scandal rocked the financial market and helped shape what we are dealing with today.

Fortunately, there were many stockholders who banded together to file a class action lawsuit against WorldCom in an effort to at least recoup some of what was lost during the scandal.

The class action suit against WorldCom commenced in December of 2000, and was held by the law firm of Specter, Roseman & Kodroff, P.C.

This particular class action lawsuit against WorldCom was filed on behalf of the southern district of Mississippi and the purchasers of WorldCom stock who did so between April 13th of 200 and November 1st of 2000, also known as the Class Period.

This suit was meant to seek damages that were done by violations of sections 10a and 20b that are held in the securities exchange act of 1934.

The Suit Against WorldCom

This class action suit against WorldCom claimed that WorldCom knowingly and purposely used false materials and misleading statements in order to misrepresent their company’s operations and business prospects.

The company also claimed that they would be able to grow profits and revenues, all the while knowing that there really would not be profit and revenues for the shareholders and employees.

Continued Class Action

This was not the only law firm to bring a class action suit against WorldCom.

They would see many more financial woes in the years after the Mississippi law suit.

This is mainly because more and more allegations of improper accounting and irregularities continued to come to light.

In fact, while ceo’s would try to play these off as simple and innocent mistakes, there was a larger problem brewing.

That was the effect of companies like this on the US market and of the world market as well.

For any system, to work, there must be faith coming from the employees, but most of all from the stockholders and from consumers themselves.

People get scared and stocks start being sold left and right, stock prices fall and companies fail.

The Impact on Society

Companies like WorldCom have brought about a change in the economy that we will not see the end of for some time to come.

The class action suit against WorldCom and the class action lawsuits that would come about in later years.

This company and others have made our market an unsteady place where consumers and stockholders are not sure who they can trust.

Unfortunately, it may take quite a few years before companies such as this are able to build that trust back up.

The only good thing to come out of this situation is the fact that companies now know that they can expect to live life under a microscope.

Their accounting can come into question at anytime, so they must be sure to maintain proper methods.

If not, any company that is found to be using fraudulent practices can expect to go downhill very quickly.