Nortel Networks will pay the Securities and Exchange Commission $35 million to settle a revenue and earnings management fraud lawsuit, the company said Monday.
The equipment maker also said it will take steps to prevent such fraud in the future, including providing the SEC with quarterly reports on its progress in implementing its remediation plan and actions to address its outstanding material weakness in internal controls.
The issue stems from 2000, 2002 and 2003 when Nortel provided fraudulent accounting schemes that allowed the company to meet unrealistic earnings guidance.
“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. “Through hard work, a dedication to excellence and an unwavering commitment to serving our customers, Nortel is recreating a great technology company which upholds the highest ethical standards and sound business practices. This is a new Nortel.”
Nortel let go a several executives in wake of the scandal, including CEO Douglas Beatty and CFO Frank Dunn. The SEC filed suit this year against them and six other former Nortel executives.