PHILADELPHIA, April 21, 2004 (PRIMEZONE) -- The law firm of Berger & Montague, P.C. has filed a securities fraud class action complaint in the Southern District of New York (Civ. Action No. 04-CV-3056) against Nortel Networks Corporation ("Nortel"), on behalf of purchasers of publicly traded securities of Nortel (NYSE:NT) (TSE:NT) between December 23, 2003 and March 15, 2004 inclusive (the "Class Period"). On April 5, 2004, Nortel announced that it was the target of a "formal" investigation by the United States Securities and Exchange Commission (the "SEC"). The announcement further confirms the seriousness of Nortel's accounting problems which had led the Company to announce last month that it intends to restate its results for 2003 and one or more earlier periods as a result of an ongoing examination of "certain accruals and provisions" in connection with Nortel's first restatement last fall of its financials for the first half of 2003 and prior years, and to suspend its Chief Financial Officer and its Controller. A "formal" investigation is serious because it gives the SEC the power to issue subpoenas for documents and information. In connection with the April 5, 2004 announcement, a Nortel spokeswoman was quoted as saying that the Company had previously been the subject of an SEC "informal" inquiry since October 2003. The news that the SEC had ordered a formal investigation immediately caused the price of Nortel shares to fall further, by 3.7%, or 23 cents, at $6.06, on heavy volume, making Nortel the most heavily traded stock on the NYSE for the day.
The Complaint charges defendants Nortel, Frank A. Dunn, Douglas C. Beatty, and Michael J. Gollogly, with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Complaint alleges that defendants' financial reports and statements which they publicly announced and/or filed with the SEC beginning on December 23, 2003 and throughout the Class Period were false and misleading. On March 10, 2004, Nortel suddenly announced that it would need to delay filing its 2003 annual financial statements with the SEC and that, as a result of its ongoing review of previously-issued financial results, the Company would need to revise its just-announced results for the full-year and certain quarters of 2003, and would likely restate its previously-filed financial results for one or more earlier periods as well because it was re-examining the bookkeeping surrounding "certain accruals and provisions in prior periods." The Company admitted that the delay in filing its 2003 annual financial statements would violate the Company's debt covenants and could, therefore, have a serious adverse impact on the Company. Then, in a highly unusual move, the Company announced on March 15, 2004 that, "effective immediately", it was placing defendants Beatty (Nortel's CFO) and Gollogly (Nortel's Controller) on a "paid leave of absence pending the completion of the independent review being undertaken by the Company's Audit Committee." Following this announcement, shares of the Company's stock fell by $1.19 per share on the NYSE, or 18.5%, to close at $5.24, in extremely heaving trading, and continued to slide further in after-hours trading. On March 29, 2004, Nortel announced that it would delay filing its first quarter results for 2004 and that it would release "limited preliminary unaudited" financial results for the first quarter of 2004 on April 29th and hold a conference call. Furthermore, the Company announced that the Annual Shareholders' Meeting originally scheduled for April 29, 2004 would be postponed to a later date. Then, on April 5, 2004, Nortel announced that the SEC had initiated a "formal" order of investigation targeting the Company.
If you purchased Nortel during the Class Period of December 23, 2003 through March 15, 2004 inclusive, you may, no later than May 17, 2004, move to be appointed as a Lead Plaintiff. A Lead Plaintiff is a representative party that acts on behalf of other class members in directing the litigation. The Private Securities Litigation Reform Act of 1995 directs Courts to assume that the class member(s) with the "largest financial interest" in the outcome of the case will best serve the class in this capacity. Courts have discretion in determining which class member(s) have the "largest financial interest," and have appointed Lead Plaintiffs with substantial losses in both absolute terms and as a percentage of their net worth. If you have sustained substantial losses in Nortel during the Class Period, please contact Berger & Montague, P.C. at investorprotect@bm.net for a more thorough explanation of the Lead Plaintiff selection process.
The law firm of Berger & Montague, P.C. is a Philadelphia law firm, consisting of over 60 attorneys, all of whom represent plaintiffs in complex litigation. The Berger firm has extensive experience representing institutional and other investor plaintiffs in class action securities litigation and has played lead roles in major cases over the past 30 years which have resulted in recoveries of several billion dollars to investors. The firm has represented investors as lead counsel in such leading securities actions as Rite Aid, Sotheby's, Waste Management, Inc., Sunbeam, Boston Chicken, and IKON Office Solutions. The standing of Berger & Montague, P.C. in successfully conducting major securities and antitrust litigation has been recognized by numerous court. For example:
"Class counsel did a remarkable job in representing the class interests." In Re: IKON Office Solutions Securities Litigation. Civil Action No. 98-4286 (E.D.Pa.) (partial settlement for $111 million approved May, 2000).
". . . (Y)ou have acted the way lawyers at their best ought to act. And I have had a lot of cases . . . In 15 years now as a judge and I cannot recall a significant case where I felt people were better represented than they are here . . . I would say this has been the best representation that I have seen." In Re: Waste Management, Inc. Securities Litigation, Civil Action No. 97-C7709 (N.D. Ill.) (settled in 1999 for $220 million).
If you purchased Nortel stock during the Class Period, or have any questions concerning this notice or your rights with respect to this matter, please contact:
Sherrie R. Savett, Esquire Phyllis M. Parker, Esquire Diane R. Werwinski, Investor Relations Manager Berger & Montague, P.C. 1622 Locust Street Philadelphia, PA 19103 Phone: 888-891-2289 or 215-875-3000 Fax: 215-875-5715 Website: http://www.bergermontague.com e-mail: InvestorProtect@bm.net
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca