October 16, 2007
Canadian kit vendor Nortel said Monday that it has agreed to pay a civil penalty of $35m in settlement of all issues with the United States Securities and Exchange Commission (SEC).
The move should mark the start of the end of the SEC’s investigation into certain prior accounting practices that have tarnished the company’s reputation and seen the removal of a number of executives.
As part of the deal, Nortel will consent to injunctions against it from violations of certain provisions of federal securities laws and will provide the SEC with quarterly reports detailing its progress in implementing its remediation plan and actions to address its outstanding material weakness in internal controls.
In March, the SEC charged four former Nortel Networks executives with manipulating earnings to meet internal targets and Wall Street expectations.
The investor protection agency said in a statement that it has charged former chief executive Frank Dunn, former chief financial officer Douglas Beatty, former controller Michael Gollogly and former assistant controller MaryAnne Pahapill.
The executives repeatedly engaged in accounting fraud between 2000 and 2004, the SEC said in a statement.
“We are pleased that we have reached final resolution in this matter. The settlement recognizes the extensive and proactive efforts made by Nortel’s board and senior management to identify and address the accounting and internal control issues and conduct that led to the investigation,” said Nortel President and CEO Mike Zafirovski.
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