Nortel Networks Pays $35 Million to Settle Financial Fraud Charges

SEC, Oct 17, 2007

Washington, D.C., Oct. 15, 2007 - The Securities and Exchange Commission today filed civil fraud charges against Nortel Networks Corporation and its principal operating subsidiary Nortel Networks Limited (Nortel) alleging that Nortel engaged in accounting fraud from 2000 through 2003 to close gaps between its true performance, its internal targets and Wall Street expectations. Nortel is a Canadian manufacturer of telecommunications equipment.

Without admitting or denying the Commission's charges, filed in the U.S. District Court for the Southern District of New York, Nortel has agreed to settle the Commission's 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, which the Commission will seek to place in a Fair Fund for distribution to affected shareholders. Nortel also has agreed to report periodically to the Commission's staff on its progress in implementing remedial measures and resolving 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 Commission'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."

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