Nortel Networks
On 1 July 2004, a class action suit by investors, Ontario Teachers and New Jersey as co-lead plaintiffs, was brought again Nortel Networks. This case was a result of the investors suffering damages because of the defendants’ violation of U.S. securities law from 23 April 2003 to 27 April 2004.
Nortel networks allegedly issued distorted financial statements and performance reports that had an effect of artificially inflating their share prices. The defendants also included: former Nortel CEO Frank Dunn, former CFO Douglas Beatty, former Controller Michael Gollogly, and Audit Committee members Guylaine Saucier, John Edward Cleghorn, Robert Alexander Ingram, and Sherwood Hubbard Smith, Jr, and Robert Ellis Brown.
The company sells Internet and data products, services and support. In addition, Nortel also provides voice and multimedia communications networks.
On 15 March 2004, Nortel released to the press that they delayed publishing its annual report and stated it had to restate its previously issued financial results. This was because it was re-examing the timing of certain aspects of their business in 2003. As a result, their share prices toppled. Shortly after this disaster, on 28 April 2004, Nortel fired the CEO, CFO and Controller. The company then came under the investigation by the Securities and Exchange Commission, the Ontario Securities Commission and the United States Attorney’s Office for the Northern District of Texas, Dallas Division.
Finally, the lead plaintiffs filed a second consolidated amended class action complaint on 16 September 2005 after they accrued even more information to support this claim.
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