Investigation: Pressure may mount for changes at WorldCom

WorldCom Inc.’s latest revelation that its phony accounting topped $7.1 billion could be a precursor to more changes at the highest levels of the bankrupt company, analysts and observers say.

The Mississippi-based telecom said late Thursday it had uncovered $3.3 billion more in bogus accounting, adding to the $3.85 billion it disclosed in June.

Still, New York bankruptcy attorney Chester Salomon said he wouldn’t be surprised if someone linked to the case perhaps a creditor or bondholder asks the bankruptcy court to appoint an independent trustee to assume management of the company.

Drake Johnstone, an analyst with Davenport & Co. in Richmond, Va., said Thursday’s disclosure likely provides more momentum for creditors who would like to see WorldCom chief executive John Sidgmore step aside.

Insurance: Conseco to restructure

Conseco Inc. announced plans Friday for a “radical change” in its capital structure but did not address reports that it was considering bankruptcy.

The insurance and financial services company said Friday it would be meeting with regulators, rating agencies and other stakeholders to discuss restructuring plans. Conseco officials also said the company was exercising a 30-day grace period on upcoming bond payments.

In response to the statement on bonds, Fitch Ratings downgraded the holding company to C, which indicates imminent default. Standard & Poor’s revised its counterparty credit ratings to SD, for selective default.

Fraud: Investors win millions in Sunbeam lawsuit

A federal judge signed off Friday on a $141 million settlement of a class-action fraud suit that investors who lost money on Sunbeam Corp. stock brought against the bankrupt appliance maker.

The suit accused the Boca Raton, Fla.-based maker of Sunbeam, Oster, Mr. Coffee, First Alert and other brands and its officers of inflating stock prices and misleading investors about the company’s sales and earnings in the 18-month period leading up to the ouster of chairman and chief executive Al Dunlap in June 1998.

U.S. District Judge Donald Middlebrooks signed the settlement agreement, which will provide about $106 million for investors. Attorneys estimated investors will be compensated for 12 percent to 15 percent of their losses.