More Legal Trouble for Nortel

Another day, another legal mess for Nortel – according to a story in the Ottawa Citizen. This time, a Georgia court give then green light for three executives to go after Nortel for damanges for alleged negligence. The issue goes back a few years to the height of telecom boom when Alteon Websystems bought a start-up called Pharsalia Networks in June 2000 where these three executives worked after being lured from Cisco with a promise for 80,000 shares worth $640,000. Next thing you know, Nortel has acquired Alteon in July 2000 for $7.8-billion. With the takeover, the shares of the executives were apparently worth $6.1 million each. To get their cash, Nortel had to buy the shares – which Nortel allegedly promised to do in early October 2000. Unfortunately, the sale didn't go through until mid-November but by that time, the shares had tumbled in value by 50%. The Georgia court ruled there is enough evidence of delays in processing the transfer to send the issues of negligence and damages to a jury.

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