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. Last Updated: 07/27/2016

SEC Query For Qwest, WorldCom Accounts

CLINTON, Mississippi -- The U.S. Securities and Exchange Commission has requested accounting information from telecommunications companies WorldCom and Qwest Communications International, the companies said Monday.

The separate requests focused on different areas for each company.

Denver-based Qwest said it received an informal inquiry from the SEC regarding its accounting policies, practices and procedures in 2000 and 2001.

The request was the second in two months, with the prior request dealing with the purchase of assets from bankrupt telecommunications firm Global Grossing Ltd.

The SEC requested from WorldCom, the No. 2 U.S. long-distance provider, information about its accounting procedures over goodwill, a charge taken in the third quarter of fiscal 2000 and personnel records and a loan it made to chief executive Bernard Ebbers, the company said.

Clinton, Mississippi-based WorldCom said it is not aware of information that would cause the SEC to initiate an inquiry, and that it will respond to the SEC's request "as promptly as possible."

Regarding Qwest, the SEC's letter focused on its accounting of sales of optical capacity, the telephone directory business and the sale of equipment to customers from which it bought Internet services or had contributed equity, Qwest said.

Qwest said the inquiry was not an indication that regulators believe that the company broke the law.

Worldcom's Ebbers told financial news channel CNBC that one aspect of the SEC request was regarding a loan the company made to him.

Ebbers had to contend with margin calls as the company's share price fell. His alternative to the loans would have been to sell assets, many of which were not easily convertible to cash, Ebbers told CNBC.

The company said it believes all of its policies, practices, and procedures have complied, and continue to comply, with all applicable accounting standards and laws.

Also included in the request was information on the company's tracking and review of earnings estimates issued by financial analysts; information the company may have on federal or state investigations into it; disputed customer bills and commissions; and integration of WorldCom's computers with those of MCI.