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Suit alleges Nortel accounting fraud

Alorie Gilbert Staff Writer, CNET News.com
Alorie Gilbert
writes about software, spy chips and the high-tech workplace.
Alorie Gilbert
A class-action lawsuit filed Wednesday against Nortel Networks and its auditor Deloitte & Touche alleges that Nortel overstated revenue by hundreds of millions of dollars in 1999 and 2000, when demand for telecom equipment the company sells began to slide. The suit, filed by law firms Rochon Genova and Lerner & Associates on behalf three plaintiffs in Ontario, is one of several shareholder lawsuits pending against the company, but the first to accuse it of accounting fraud and implicate its auditor in a manner similar to accounting scandals at Enron and WorldCom.

Nortel, which plans to discuss second-quarter earnings Thursday, is in the midst of installing a new chief financial officer, Douglas Beatty, who was named Wednesday. Chief Executive Frank Dunn had held the post after the resignation of the company's former CFO in February over improper stock trading.