Nortel to hand over USD2.5 billion to settle class action suit

Ontario-based telecoms equipment provider Nortel has agreed to pay USD2.5 billion in cash and stock to settle two class action lawsuits brought by its shareholders over an accounting scandal dating back to 2004. The proposed settlement would include USD575 million in cash and payment of shares representing a 14.5% stake in the global group. Financial misdemeanours in 2004 resulted in the firing of major executives, including CEO Frank Dunn, several lawsuits and regulatory investigations in Canada and the US. Nortel’s previous earnings reports had to be revised and several executives, including Dunn, are being individually sued. Nortel, which has been working to recover from the scandal that forced it to restate previous financial results, said it wants to settle as quickly as possible to avoid being tied up in prolonged litigation.