Global Settlement Bid Rejected

The Securities and Exchange Commission rejected a settlement proposal from Global Crossing Ltd., the big fiber-optic network operator that filed for bankruptcy protection in January.

Under Global Crossing’s offer, the company would have agreed to cease and desist fraudulent practices without denying or admitting guilt, the Wall Street Journal reported Wednesday, citing unidentified people familiar with the matter.

The SEC rejected the proposal because it would have applied to the company in general and not to specific individuals.

The commission wants a settlement that names specific Global Crossing officers and executives. Potential sanctions against company officials include disbarment from future office at publicly traded companies, the Journal said.

Investigators are looking into what Global Crossing Chairman Gary Winnick knew when he sold $123 million in stock in May 2001, when the company engaged in numerous swap transactions, the paper said, citing unidentified people familiar with the situation.

A spokesman for Winnick declined to comment.

The agency’s stance shows the increased pressure it is applying on Global Crossing, which once had a greater market value than General Motors Corp.

Global Crossing’s Chapter 11 bankruptcy filing in January, then the fourth-largest in history, was part of a wave of accounting scandals across the industry.

A day after the bankruptcy filing, former Global Crossing finance executive Roy Olofson alleged that the company used improper accounting methods, including so-called swap transactions, to help maintain revenue and bolster its stock price.

This month, a pair of Asian conglomerates acquired Global Crossing for $250 million, slightly more than 1% of its bankruptcy-petition valuation of $22 billion.