Chairman Harvey Pitt said his agency was seeking an order to prevent the No. 2 long-distance telephone and data services company from selling assets, destroying documents and making hefty payouts to senior officers.
The charges come after the communications giant admitted it hid almost $4 billion of costs, bringing it to the brink of bankruptcy in one of the biggest accounting scandals ever.
The SEC has also ordered WorldCom to file under oath, before Monday's market open, a detailed report of the circumstances surrounding its restatements.
"This is the third time in history that we have invoked this authority, all within the last few months," Pitt said in remarks to the New York Economic Club.
"These actions underscore the active role the SEC has played and will continue to play in uncovering wrongdoing, and correcting it," said Pitt, who came under fire on Capitol Hill on Wednesday for being too cozy with the accounting industry.
The top securities cop said that the SEC was working with the Department of Justice and U.S. attorneys and that if they uncovered conduct that warranted criminal prosecution, justice would be swift.
The Justice Department has said Clinton, Miss.-based WorldCom is under review. Its investigation of energy company Enron led to the conviction earlier this month of auditor Arthur Andersen, which also vetted WorldCom's books.
At the New York gathering, Pitt also signaled his intention to speed up reforms for financial statements and the accounting industry.
Hoping to revive investor confidence in the tarnished accounting industry, the SEC last week outlined its plans for an auditor oversight body--the Public Accountability Board. Pitt issued the proposal for 60 days of public comment and had hoped to have the board up and running by the year's end, but on Wednesday he accelerated his time frame.
"My hope now is that we can begin implementing our proposals as shortly after the close of the comment period as is possible...in the event there is no legislation," he said.
Pitt also said chief executives and financial officers of the 1,000 largest companies would have to personally certify the accuracy of financial statements from Aug. 15--about the time the next quarterly reports flood in.
Pitt talked to the head of the Office of Management and Budget on Wednesday about additional resources for his overworked agency, on top of the 100 staffers already requested after Enron's collapse..
"The seemingly endless drumbeat of Enron, Global Crossing, Tyco, ImClone, Xerox, Andersen, Adelphia and now WorldCom have caused investors around the globe to lose confidence," he said. "With all the new initiatives we are undertaking...we need even more resources than those we asked for three months ago."
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