MCI Shareholders Jump the Payout Line

The SEC wants to impose a half-billion dollar penalty on the telecom giant and use the money to compensate investors. Creditors will howl

As precedents go, the Securities & Exchange Commission's proposed settlement with MCI is certainly eye-popping: At $500 million, the penalty is 50 times greater than the heaviest fine the SEC ever levied on a company accused of accounting fraud. But what's truly fascinating about the deal, details of which were released on May 19, is the possible precedent it sets for bankruptcy law.

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