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Wednesday, 12 February, 2003, 19:03 GMT
Wall Street scandals at a glance
Wall Street sign
Spotlight on Wall Street
Confidence in corporate America has been shaken to the core by a series of accounting scandals.

What started with an admission of false profits by Enron at the end of 2001, has rapidly become a rout of some of the best known names on Wall Street during 2002.

The US financial watchdog has said that all firms must now certify the accuracy of their accounts.

BBC News Online takes a look at the companies that have dominated the headlines and planted doubts about the integrity of corporate America.

WorldCom

WorldCom has admitted orchestrating one of the largest accounting frauds in history.

In June 2002, the company admitted it had inflated its profits by $3.8bn (2.5bn) between January 2001 and March 2002.

Two months later it confessed its accounting errors were almost double the level previously reported - taking the total to more than $7bn.

The firm was already shrouded in scandal after the departure of its founder and chief executive, Bernie Ebbers in April.

Mr Ebbers borrowed hundreds of millions from the firm to underwrite the inflated prices he had paid for the company's own shares.

Enron

When energy giant Enron reported its third quarter results last October, it revealed a large, mysterious black hole that sent its share price tumbling.

The US financial regulator - the Securities Exchange Commission - launched an investigation into the firm and its results, prompting Enron to admit it had inflated its profits.

Once it became clear that the firm's success was in effect an elaborate scam - a chorus of outraged investors, employees, pension holders and politicians wanted to know why Enron's failings were not spotted earlier.

The US government is now thought to be studying the best way of bringing criminal charges against the company.

Andersen

Attention quickly turned to Enron's auditors - Andersen.

The obvious question was why did the auditors - charged with verifying the true state of the company's books - not know what was going on?

Andersen reacted by destroying Enron documents, and on 15 June a guilty verdict was reached in an obstruction of justice case.

The verdict signalled an end to the already mortally wounded accountancy firm.

Adelphia

Telecoms company Adelphia Communications filed for bankruptcy on 25 June.

The sixth largest American cable television operator is facing regulatory and criminal investigations into its accounting.

John Rigas, the 77-year old founder and his two sons have been arrested, charged with "looting Adelphia on a massive scale".

The company has restated its profits for the past two years and admitted that it didn't have as many cable television subscribers as it claimed.

Xerox

In April, the SEC filed a civil suit against photocopy giant Xerox for mis-stating four years' worth of profits, resulting in an overstatement of close to $3bn.

Xerox negotiated a settlement with the SEC with regard to the suit.

As part of that agreement, Xerox agreed to pay a $10m fine and restate four years' worth of trading statements, while neither admitting, nor denying, any wrongdoing.

The penalty is the largest ever imposed by the SEC against a publicly traded firm in relation to accounting misdeeds.

Tyco

In early June, the US District Attorney extended a criminal investigation of the firm's former chief executive, Dennis Kozlowski.

Dennis Kozlowski - the man behind the creation of the Tyco conglomerate - is charged with avoiding $1m in New York state sales taxes on purchases of artwork worth $13m.

The SEC enquiry into Tyco is understood to relate solely to Mr Kozlowski - but there are investor fears the probe could reveal accounting irregularities.

Global Crossing

Global Crossing was briefly one of the shiniest stars of the hi-tech firmament.

The telecoms network firm filed for Chapter 11 bankruptcy on 28 January.

The peculiar economics of bandwidth meant that firms could drum up the appearance of lively business by trading network access with each other.

They could effectively book revenues when in many cases no money at all changed hands.

US regulators are now looking closely at the collapse, questioning whether it is another case of a company flattering its figures.

Qwest

Hot on the heels of Global Crossing came broadband giant Qwest.

The Denver-based telecoms firm was already under a criminal investigation when it admitted that it would restate its profits.

It too has improperly accounted for about $1.16bn (740m) in sales of optical capacity on its network, as well as sales of communications equipment.

It claims it is still solvent, but there are worries over whether banks will cut off its funding.

Merrill Lynch

In this atmosphere of corporate distrust, the role of investment banks has also faced increased scrutiny.

Analysts are suspected of advising investors to buy stocks they secretly thought were worthless in order to secure lucrative deals.

Merrill Lynch reached a settlement with New York attorney general Eliot Spitzer. The settlement imposed a $100m fine upon Merrill but demanded no admission of guilt .

Under the deal, Merrill Lynch has agreed to sever all links between analysts' pay and investment banking revenues.

12 more Wall Street investment firms are under investigation for laws related to the conduct of their securities analysts.


Politics of regulation

Worldcom goes bust

Enron fall-out

Andersen laid low

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