Nortel Networks, a telecommunications equipment maker, said Monday that the Securities and Exchange Commission has begun a formal investigation into the company's restated financial statements. In October and last month, the company announced that it wasand would likely restate them for certain periods. It has already restated earnings from 2000, 2001 and 2002, along with figures for the first two quarters of 2003.
Nortel's internal auditors began looking into the company's finances after it was discovered that roughly $900 million in liabilities had been either recorded incorrectly in prior periods or had not been properly released in the appropriate periods. In March, the company suspended Chief Financial Officer Douglas Beatty and Controller Michael Gollogly. The accounting matter had been the subject of an informal SEC inquiry. Nortel said it is has been fully cooperating with the SEC.