Nortel to pay $1M in OSC settlement
Nortel Networks Corp. will pay $1 million as part of a settlement with Ontario securities regulators over allegations that the company issued misleading financial statements between 2000 and 2003.
The settlement was approved Tuesday by an Ontario Securities Commission panel.
The $1 million will go to cover OSC investigation costs, but the settlement does not include any other monetary penalties. The OSC panel said that imposing further penalties would not act as a deterrent.
The OSC had alleged that Nortel had inadequate internal controls that allowed improper revenue recognition practices — either recognizing revenue prematurely or deferring it to a later period —to occur during the times in question, all to meet revenue or earnings targets.
The OSC also alleged that Nortel filed financial statements that did not meet Canadian accounting standards.
Nortel has already had to restate its financial earnings going back several years to clear up an accounting mess that has ensnared the company for much of the last four years.
In March, the OSC announced legal proceedings against former Nortel CEO Frank Dunn and two other former senior executives.
The OSC alleged that Dunn and two others broke securities laws by making "material misstatements" in Nortel’s financial filings that they knew or should have known were "materially misleading."
The case against the three former executives is still continuing.
Nortel shares jumped $1.10 to close at $27.61 in Tuesday trading on the TSX.