A month after the toothless Ontario Securities Commission gave Nortel a soft slap on the wrist ($1-million) fine for accounting irregularities (aka an accounting scandal allegedly spawned by the books being cooked to trigger a lucrative bonus scheme), the U.S. Securities and Exchange Commission is apparently to hit Nortel with a $100-million fine. The SEC filed civil charges against four ex-Nortel executives, accusing them of an accounting fraud that helped the company meet Wall Street expectations. For more, check out Engadget.
No wonder Nortel went looking for a cash cow like Avaya. This will be an example of U.S. regulation slitting the arm of a company which came out on its own volition and admitted to finding fraud. The message the SEC is sending is a bad one – don’t admit to anything because we’ll still fine you heavily. Companies will be less likely to admit to anything on their own and will just wait to be caught by the SEC. They should be going after bank accounts of Dunn and others instead they are punishing a company that needs every spare dollar to complete a turnaround.
Observer
What strikes me as astounding is the low penalties the regulating watchdogs slapped on for fraud.
Everone knows the OSC lacks balls but the SEC’s move was utterly astounding.
Their commissioners with this new power in unchartered waters seem to contradict the very purpose of what the SEC is there to do.
Unless they too are concerned about crippling the company with a by far more fair fine amount , they facilitate open season on the investor given the gravity does reflect this is of one of the greatest fraud settlements in history.
Companys can beef a stock, dilute into a bloated value, keep bonuses, print paper to pay the fallout, downplay further revisions and inquiry, or keep trading with unreliable numbers with regulator’s blessings they call “freinds”.
This saga’s theatrics and punch lines are just hysterical, what’s on earth is next. A breakthrough product or turn around to break even or profitability again? =)
Apple
Mark, your source says
SEC to fine Nortel up to $100 million for shady accounting
but what if OBJ is right about no less than $100 mill?
and the spirit of their article indicates that it is the truth…
no less than $100 is not the same as up to $100 mill
OBJ
Bloomberg News, citing people close to the matter, said attorneys with the Securities and Exchange Commission have received approval to seek a fine of no less than $100 million US from Nortel in connection with the string of financial restatements and allegations of fraud against a number of former executives over the past several years.
And this
The penalty is apparently the first test of a new policy that gives SEC commissioners more clout when it comes to handing down penalties for corporate wrong-doing. The Bloomberg report suggests this penalty may also come in response to concerns that SEC chairman Christopher Cox is soft on companies at the expense of investors.
==============
from what OBJ posted we can see Nortel at he top of the list for that reason
Which position NT will take after SEC vs Nortel’s managers trial ends and after the fine SEC will smack on NT?
so far NT is 4th 5th on that list… http://securities.stanford.edu/top_ten_list.html
many
Maybe they can pay the SEC with stock
At the end of the day nortel will settle for less, but I think the message is clear and crisp, clean up you finances and do it the first time.
Bill Ritchie.
I understand the Ontario courts will NOT allow further class action lawsuits against Nortel !!!
Why? is the question. Does anyone know?
SEC Slams Down on Nortel
A month after the toothless Ontario Securities Commission gave Nortel a soft slap on the wrist ($1-million) fine for accounting irregularities (aka an accounting scandal allegedly spawned by the books being cooked to trigger a lucrative bonus scheme), the U.S. Securities and Exchange Commission is apparently to hit Nortel with a $100-million fine. The SEC filed civil charges against four ex-Nortel executives, accusing them of an accounting fraud that helped the company meet Wall Street expectations. For more, check out Engadget.