U.S. and Ontario securities authorities file complaints against former Nortel executives
One week after Waterloo-based Research in Motion's chairman resigned over stock options errors, Ottawa-based technology firm Nortel is facing allegations of financial misconduct.
United States securities officials have charged Nortel's former CEO Frank Dunn with cheating investors out of billions of dollars.
In court filings in New York, the U.S. Securities and Exchange Commission (SEC) alleged that Dunn and three other former executives conspired from September 2000 to “manipulate” Nortel’s accounting, resulting in billions of dollars of losses for shareholders.
Dunn, ex-chief financial officer Douglas Beatty, former controller Michael Gollogly and one-time assistant controller MaryAnne Pahapill are charged with civil fraud.
Ontario regulators have also announced a formal hearing to probe allegations of financial misconduct and negligence against Dunn, Beatty and Gollogly. The Ontario Securities Commission (OSC) complaint alleges the three violated Ontario's securities law and acted "contrary to the public interest."
The U.S. complaint alleges the financial executives aimed to “create the false appearance” that Nortel was once again profitable after three years of losses so they could pay bonuses to themselves and other employees.
The complaint blames Dunn for creating a corporate culture that put financial targets ahead of the truth.
“Nortel’s executives and finance managers treated their books as tools to meet the company’s financial objectives,” the SEC said in its complaint. “Dunn, in particular, made known his lack of respect for Nortel’s control organization, which he saw as an impediment to the company’s ability to do business quickly.”
In a statement, Dunn said it would have been more appropriate if the SEC had left the matter to the Ontario authorities.
The Ontario hearing will take place May 1.
United States securities officials have charged Nortel's former CEO Frank Dunn with cheating investors out of billions of dollars.
In court filings in New York, the U.S. Securities and Exchange Commission (SEC) alleged that Dunn and three other former executives conspired from September 2000 to “manipulate” Nortel’s accounting, resulting in billions of dollars of losses for shareholders.
Dunn, ex-chief financial officer Douglas Beatty, former controller Michael Gollogly and one-time assistant controller MaryAnne Pahapill are charged with civil fraud.
Ontario regulators have also announced a formal hearing to probe allegations of financial misconduct and negligence against Dunn, Beatty and Gollogly. The Ontario Securities Commission (OSC) complaint alleges the three violated Ontario's securities law and acted "contrary to the public interest."
The U.S. complaint alleges the financial executives aimed to “create the false appearance” that Nortel was once again profitable after three years of losses so they could pay bonuses to themselves and other employees.
The complaint blames Dunn for creating a corporate culture that put financial targets ahead of the truth.
“Nortel’s executives and finance managers treated their books as tools to meet the company’s financial objectives,” the SEC said in its complaint. “Dunn, in particular, made known his lack of respect for Nortel’s control organization, which he saw as an impediment to the company’s ability to do business quickly.”
In a statement, Dunn said it would have been more appropriate if the SEC had left the matter to the Ontario authorities.
The Ontario hearing will take place May 1.
