$3 billion class action lawsuit filed against Nortel, auditors

A class action lawsuit seeking $3 billion has been filed against Nortel Networks and its auditors, Deloitte and Touche LLP.
The suit, filed in Ontario Superior Court on behalf of investors who bought the company’s shares between April 24, 2003 and April 27, 2004, names several of Nortel’s former directors and officers, including former CEO Frank Dunn.
Damages are sought based on allegations the parties involved misrepresented the financial condition of the telecommunications giant by creating improper cash reserves and “issuing false reports and financial statements”, according to a joint statement from plaintiffs’ law firm Rochon Genova LLP and Lerners LLP, which will assist in the case. The suit alleges Nortel executives “used these records to trigger millions of dollars in bonus payments”.
The Nortel case raises serious issues about the integrity of the capital markets in Canada and the disclosure obligations of a major Canadian issuer, and this must be resolved by the Superior Court of Justice in Ontario,” said Peter Jervis, a partner at Lerners LLP. “These issues affect thousands of Canadian investors across this country.”
The statement notes that in January, 2005 when Nortel restated its 2003 financial results, total earnings were more than US$298 million less than originally disclosed.