Nortel Networks yesterday agreed to a settlement that includes a $35-million penalty after the Securities and Exchange Commission alleged that the Canadian telecom equipment maker had engaged in accounting fraud from 2000 through 2003.
“Under new leadership, Nortel has undertaken significant efforts to address the wrongdoing, remedy the harm, and implement a remediation plan to prevent recurrence of the misconduct.” –Linda Thomsen, SEC
Without admitting or denying the SEC’s charges, filed yesterday in the U.S. District Court for the Southern District of New York, Nortel agreed to settle the action by consenting to be permanently enjoined from violating the antifraud, reporting, books and records, and internal control provisions of the federal securities laws and by paying a $35-million civil penalty.
The SEC said it would place the money in a Fair Fund for distribution to affected shareholders. Nortel also agreed to report periodically to the SEC on its progress in implementing remedial measures and resolve an outstanding material weakness over its revenue recognition procedures.
“This is an important fraud case involving conduct from 2000 through 2003,” said Linda Thomsen, director of the SEC’s Division of Enforcement. “Since that time, under new leadership, Nortel has undertaken significant efforts to address the wrongdoing, remedy the harm, and implement a remediation plan to prevent recurrence of the misconduct.”