Nortel pays $35m to end fraud probe
Fund for shareholders
Nortel has agreed to pay $35m in damages to shareholders hurt by the company's fraudulent accounting practises.
The Securities and Exchange Commission (SEC) accused Nortel of falsely inflating revenues between 2000 and 2003 in order to ensure the company hit Wall Street targets.
Nortel neither admits nor denies the charges, but is paying $35m into a fund to compensate shareholders.
After the SEC filed civil fraud charges against Nortel yesterday the company agreed to settle. According to a statement on the SEC website: "Nortel has agreed to settle the commission's action by consenting to be permanently enjoined from violating the anti-fraud, reporting, books and records and internal control provisions of the federal securities laws and by paying a $35m civil penalty,"
The company also agrees to meet regulators every quarter to update them on progress. The statement continues: "As part of the settlement, Nortel agrees to report to the commission staff every quarter until it fully implements its remediation programme, and the company and its outside auditor agree that the existing material weakness has been resolved."
The SEC statement is here. ®