WorldOne

THE CASE

BETWEEN THE UNDER (KNOWN AS THE DEFENDANTS

AND

THE EXCECUTIVES OF WORLDCOM (KNOWN AS THE PLANTIFF

OVER

FINACIAL ACCOUNTING FRAUD SELF REGISTATION Self registration is the filling in of new issues within the Security Exchange Commission that allows participation in the Security Exchange Market Exchange within a period of about two years pending whenever the demand of the new issues arises

The main purpose of the `Self Registration ' is that at the time of filling in the new issue , the demand for the offering had

not risen and investors cannot place a bid therefore they have to wait until the demand arises even before the expiration of the two years

THE WORLDCOM CASE

The defense is based on the 1999 - 2000 audited financial report carried out by Anderson (Worldcom Auditor ) `who did not uncover any financial fraud until May 2007 . Between 2000 and 2001 WorldCom sold two bond offerings using the Audited financial report as at that time . Evidently provided an unedited interim report of 2000 and 2001 as at the time of filling in the `Self Registration ' at the Security Exchange Commission and the information he presented is similar to the Audited Financial Report prior to the sale of the bond offerings on the said dates THE DUE DILIGENCE INVESTIGATION REPORT

The due diligence of an investment bank exists for the fact that the `investment bank ' as the word implies , cannot invest in a business without carrying out due diligence . The due diligence is carried out in to determine the success and failure of a business taking into consideration of the past performance , present and in the future

The due diligence report is carried out in case of purchasing existing business and other investment that require capital . The investment bank may be required by the investor or vendor to provide loan or equity capital . The due diligence report will be based on the past , present and future development to determine the cash flow know as the `debt servicing factor ' of the requested loan

During the due diligence investigation , the following areas are thoroughly explored

Personnel Review : The staff of the business employed and the individual skills and also to know if the company is over staff

The labour strength could be reduced if it is overstaff and retaining only the skilled staff

Books of Account : The financial reports of the business becomes very necessary which will picture out the financial strength and weakness of the business . The books include the audited Profit and lost Statement and Balance Sheet for the last three years . The company assets and liabilities will be revealed in theses books of account

Marketing : The demand of the products and services will be taken into consideration and also to know the customers they are dealing with including creditors as well

Property or equipment : The type of equipment used if directly purchased or on lease , appreciation and depreciation

Business operation : They will take into consideration the location of the business , inventories . Insurance policies and...