The SEC charged former Nortel CEO Frank Dunn and three other former execs with engaging in an accounting fraud from which the company has yet to recover. The suit claims that the four execs had repeatedly engaged in accounting fraud from September 2000 through January 2004 in order to meet earnings projections. The SEC's Linda Thomsen said: "Each of the defendants betrayed Nortel's investors and their misconduct gave rise to billions of dollars in shareholder losses." One part of the former Nortel execs' plan, according to the suit, was to institute new accounting policies that recognized revenue on idled, undelivered inventory, which led to the company accelerating $1 billion in revenues during 2000 through improper use of "bill and hold" transactions.
For more on Nortel's accounting imbroglio:
- read this article from the WSJ (sub. req.)