WorldCom case nears settlement

WorldCom was last night believed to be on the verge of settling a $9bn (£6bn) fraud case brought by the securities and exchange commission, the US regulator, in a move that would give the one-time telecoms star a better chance of survival.

The SEC was thought likely to defer a multi-million dollar fine on the collapsed telecoms company until the true state of its finances becomes clearer next year.

An agreement on the charges with the SEC is regarded as one step further along the long road from the bankruptcy protection it sought earlier this year when it became biggest corporate failure in the US.

Speculation about WorldCom's imminent settlement with the SEC came as new rumours circulated saying the US regulator was close to finalising the terms of a deal with Wall Street firms over any conflicts of interest between analysts and corporate financiers during the dotcom boom.

Earlier estimates that the Wall Street firms, such as Citigroup and Credit Suisse First Boston, faced a combined $1bn fine were being scaled back to the region of $500m.

The settlement is thought to be part of a wider solution to a plethora of investigations into Wall Street, including the high-profile case brought by New York attorney-general Eliot Spitzer.

The strained relationship between investment banks and corporate clients has also spilled over into the City, it emerged yesterday, after Morgan Stanley was accused by luxury good retailer LVMH of conflicts of interest in some of its London research.

LVMH refused to comment. Morgan Stanley said: "We categorically reject LVMH's claims and intend to defend this suit vigorously."