Nortel Networks Corporation Investors Class Action Lawsuit 05/19/2009
On Tuesday, May 19, 2009, an investor in Nortel Networks Corporation (USA)(OTC: NRTLQ; formerly NYSE: NTL) has filed a prosposed securities class action lawsuit in the United States District Court for the Southern District of New York on behalf of purchasers of the securities of Nortel Corp. (NYSE: NTL) between May 2, 2008 and September 17, 2008 against certain of Nortel’s former executives.
According to the complaint the plaintiff accuses that certain of Nortel’s former executives violated the Securities Exchange Act of 1934 for their failure to disclose material adverse facts about Nortel’s true financial condition, business and prospects. Nortel Networks Corporation is not named in this action as a defendant because it and its core operating subsidiaries filed for bankruptcy protection in January 2009. Then on September 17, 2008, Nortel Networks issued a press release announcing its "preliminary view on certain third quarter results”, that it was engaging in a "comprehensive review” of Nortel Networks’s business, and that it "planning” was "underway for further restructuring and other cost reduction initiatives.” In response to these announcements, the price of Nortel stock declined from $5.30 per share to $2.68, on heavy trading volume, so the lawsuit. Nortel Networks Corporation supplies end-to-end networking products and solutions that help organizations enhance and simplify communications. Nortel Networks Corporation is located in Toronto, Canada and had $10.948billion in total revenue in 2007 and $10.421billion in total revenue in 2008. Nevertheless Nortel Networks Corporation filed for bankruptcy in January 2009 after losing $5.8 billion last year as phone companies curbed spending to cope with the slowing economy. It is expected that Nortel Networks Corporation at least will reduce 5,000 workers (15 percent of the staff). Nortel Networks Corporation’s stock has dropped 97 percent in the past year.