The Clinton, Miss.-based company also saw its shares more than double in Nasdaq trading, albeit only going to 20 cents from 10 cents, a day after new Chief Executive John Sidgmore apologized for the scandal and tried to stem the company's hemorrhaging.
U.S. District Judge Jed Rakoff set March 31 as the tentative date for the Securities and Exchange Commission to begin presenting its case accusing WorldCom of violating securities laws by covering up $1.22 billion in losses by improperly booking $3.85 billion in expenses.
The SEC is seeking unspecified monetary penalties and to bar the company from violating securities laws again. However, the trial could be delayed if the two sides enter settlement talks, a fairly common event.
Rakoff also appointed former SEC chief Richard Breeden to ensure that no documents are destroyed by the company and that no payments that exceed $100,000 are made to current or former executives.
"I want a hands-on monitor who will report to me what's going on," Rakoff said. He said Breeden would be free to "look into every nook and cranny to fulfill his function."
Breeden's appointment follows allegations that bankrupt energy trader Enron's auditor, Arthur Andersen and telecommunications provider Global Crossing shredded documents that could shine light on the companies' accounting methods. Enron also awarded bonuses to key staffers as the energy company's problems deepened.
A WorldCom spokeswoman declined to comment on the judge's move.
WorldCom's Sidgmore on Tuesday tried to allay fears on Wall Street that the company would not file for bankruptcy protection or break up its core assets, but made clear such a position was dependent on negotiations for new credit lines.
"This (bankruptcy) is not our preferred path," he told reporters during a 45-minute grilling by 100-plus reporters on Tuesday. "And I think, fundamentally, the real issue hinges on what the banks do right now."
Despite the its predicament, the company staved off a delisting of its two tracking stocks that was set for Friday by appealing Nasdaq's claim that WorldCom no longer met the listing requirements.
WorldCom, which is the No. 2 U.S. long-distance telephone and data services company and has operations in 65 countries, carries about half of all e-mails in the world and 70 percent of all e-mails in the United States.
Shares of WorldCom Group, which tracks the company's data services operations, shot up to 29 cents at the open of regular trading, almost triple the 10 cents at which it closed on Tuesday.
The stock has since pared those gains and closed up 12 cents, or 120 percent, at 22 cents, with 1.02 billion shares trading hands. The shares of MCI Group, which track the carrier's consumer long-distance operations, were up 16 cents, or more than 48 percent, at 49 cents.
The rise in the stock could be a result of short-sellers covering their positions, or others speculating WorldCom could get additional credit lines and avoid bankruptcy, one analyst said.
Story Copyright © 2002 Reuters Limited. All rights reserved.