SEC charges 4 ex-Nortel execs with fraudSuit alleges they tried to bridge gaps in the company's performance by manipulating finances.NEW YORK (CNNMoney.com) -- The Securities and Exchange Commission charged 4 former Nortel Networks executives with accounting fraud Monday. Former CFO and Controller Douglas C. Beatty, former CFO and CEO Frank A. Dunn, former Controller Michael J. Gollogly and former Assistant Controller and VP of corporate reporting MaryAnne E. Pahapill have been named in a civil fraud suit brought by the SEC in the U.S. District Court for the Southern District of New York, according to a press release from the SEC.  The suit alleges the four Nortel (up $0.09 to $28.17, Charts) executives sought to bridge the gaps between the company's true financial performance, its internal expectations and Wall Street's targets between September 2000 and January 2004. Toronto-based Nortel is a telecommunications equipment manufacturer. The complaint charges the four executives with fraud, falsifying books and records and lying to auditors. Each is also charged with aiding and abetting the company's violation of reporting, books/records and internal controls rules. Dunn and Beatty are separately charged with violations of Sarbanes-Oxley officer certification provisions, the release said. In an e-mailed statement, Nortel declined to comment on the SEC's case but said the company is continuing to cooperate with the Ontario Securities Commission, which is conducting a separate investigation. In a statement, former CEO Frank Dunn questioned the timing of the SEC's investigation. "I am disappointed that, after three years, the United States Securities and Exchange Commission has brought charges on the same day in respect of the same matter as the Ontario Securities Commission. "I think it would have been appropriate, under the circumstances, if the authorities in the United States had deferred to the Ontario Securities Commission in what is really a Canadian matter, and had acknowledged that the Canadian authorities are fully capable of addressing these important issues," Dunn said. "I hope that, so that the issues can now be fully and fairly explored, they will be dealt with in a hearing in Canada." The SEC is seeking a permanent injunction, civil monetary penalties and the barring of officers and directors. "Investors were misled for extended periods of time about the health and stability of Nortel's operations," said Christopher Conte, an associate director at the SEC's Division of Enforcement, in the release. "Further, these defendants all received significant compensation, in some cases in the millions of dollars, while they were manipulating Nortel's financial results," said Conte. Conte further alleged that "in some cases, these individuals received such compensation only because they manipulated Nortel's financial results." Nortel competes with Alcatel-Lucent (Charts), Cisco Systems (Charts) and Siemens AG (up $1.64 to $106.60, Charts). ---------------------------------------------- |
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