U.S. News

SEC to Fine Nortel Over Accounting Fraud: Report


U.S. securities regulators are planning to fine Nortel Networks up to $100 million for accounting fraud, Bloomberg reported on its Web site on Friday.

The Securities and Exchange Commission fine is the first test of a policy that gives the agency's commissioners more say in corporate penalties, according to the report, which cited people with direct knowledge of the matter.

SEC attorneys received the commissioners' approval last month to seek a fine of less than $100 million from Nortel , the report said. The case may provide a sign of what penalties to expect from the SEC amid concerns that Chairman Christopher Cox is favoring companies at the expense of investors.

Neither Nortel nor the SEC immediately returned calls seeking comment.

In March, the SEC filed civil charges against four former Nortel executives, accusing them of an accounting fraud that helped the company meet Wall Street expectations.

The SEC charged the misconduct occurred at Nortel, a Canadian manufacturer of telecommunications equipment, between September 2000 and January 2004.

Nortel said in March that it would be restating its results for the fourth time in four years, corrections that first began in November 2003. Earlier restatements came as a result of accounting scandals. Later errors surfaced as management tried to tighten internal controls over financial reporting.