Sign in Subscribe
Telecommunications equipment industry

Nortel Securities Class Action Lawsuit Extended, Shareholders Eligible for Compensation

Strategic Insights

— 2 min read

Nortel Networks Corporation shocked the market in April 2004 by firing its CEO and two top executives, revealing a massive financial scandal that led to a restatement of 2003 earnings, cutting profit in half. The company also delayed reporting its first-quarter results, and its shares plummeted. A class action lawsuit was filed against Nortel, alleging that the company and its top executives committed securities law violations, causing the stock price to trade artificially inflated levels. The law firm Scott + Scott, LLC is representing individuals who purchased Nortel securities during the period between April 24, 2003, and March 15, 2004, and are now eligible for compensation.

Key Takeaways:

  • Scott + Scott, LLC has extended the class period in a securities class action lawsuit against Nortel Networks Corporation, alleging that the company and its top executives violated securities laws.
  • The lawsuit claims that Nortel's shares traded artificially inflated levels due to the issuance of false and misleading financial statements.
  • Nortel's CEO and two top executives were fired in April 2004, and the company delayed reporting its first-quarter results.
  • The lawsuit alleges that defendants would benefit from raising the company's credit rating to "investment grade" to increase the company's net income and refinance its debt at a preferable rate.
  • Defendants were rewarded with $30 million in bonuses after posting false, positive fourth-quarter results.
  • Nortel's shares declined from over $8 to $5.19 after the delay in filing its annual report.
  • Shareholders who purchased Nortel securities during the period between April 24, 2003, and March 15, 2004, are eligible for compensation.
  • Scott + Scott, LLC is a Connecticut-based law firm with offices in Ohio and California, specializing in securities litigation.
  • The firm is currently litigating cases against Nortel, Global Crossing, Canadian Superior Energy, Novastar Financial, Inc., and others.

Statistics:

  • The class period for the lawsuit is between April 24, 2003, and March 15, 2004.
  • The company's shares reached over $8 per share during the period.
  • The shares declined to $5.19 after the delay in filing its annual report.
  • Nortel's CEO and two top executives were fired in April 2004.
  • The company delayed reporting its first-quarter results.
  • The lawsuit alleges that defendants benefited from raising the company's credit rating to "investment grade."
  • Defendants were rewarded with $30 million in bonuses after posting false, positive fourth-quarter results.

Sources:

  • Scott + Scott, LLC
  • Nortel Networks Corporation
  • Securities Exchange Act of 1934
  • Moody's credit rating agency
  • U.S. Securities and Exchange Commission
  • Scott + Scott, LLC website: www.scott-scott.com
  • ASIA PULSE 29-04 1316

Read more