If you were involved in one of Nortel’s class-action lawsuits that have been settled, don’t get your hopes too high about getting your money soon. According to the Toronto Star, the cash from the biggest lawsuit – $2.5-billion that was settled with a combination of $819-million in cash and $1.66-billion in stock – won’t be paid out for several months as a process company goes through the claims made by 237,642 shareholders to determine which ones are valid and how much each investor lost. The process could take even longer that that a Maryland travel agency, Rinis Travel Services Inc., has filed an appeal of the settlement. Rinis bought 300 Nortel shares in late-2000 as part of a profit-sharing trust.
Archive for the ‘Legal Issues’ Category
Time to turn the page on some of Nortel’s legal woes after Mr. Justice Warren K. Winkler of the Ontario Superior Court of Justice approved an estimated $2.5 billion settlement last weeks that resolves seven lawsuits in the United States, Ontario, Quebec and British Columbia over whether Nortel misled investors during two separate class periods. The decision follows the approval of the settlement in the two U.S. class actions last month by U.S. District Court Judges Richard Berman and Loretta Preska.
Under the settlement, Nortel will pay $575 million in cash and issue common shares representing 14.5% of its current equity, worth approximately $1.7 billion based on its current share value. The settlement also includes $228.5 million in payments from Nortel’s insurers. Nortel has also agreed to contribute one half of any recovery in existing litigation by Nortel against former senior officers (Frank Dunn, Dough Beatty and Michael Gollogly) who were terminated for cause in April 2004.
In approving the settlement, Justice Winkler said the settlement was “fair, reasonable and in the best interests of the class (of Nortel investors)” and provides “the maximum available amount for satisfaction of the claims in total, short of trial”.
Looks like Apple’s new iPhone is becoming a legal hot potato. First, Cisco threatens to sue Apple over the use of “iPhone”; and now Nortel could have some issues about Apple’s use of the term “Visual Voicemail”, according to The Register. Nortel sells a product using “Visual Voicemail” within its Voice Office Applications Suitem and it provides a visual display of a voice mail, which can be played using an IP phone supplied by Nortel “So in principal, it works exactly the same as the Visual Voicemail facility built into Apple’s new iPod phone”, The Register said. For even more of Apple’s legal troubles, check out Paul’s blog.
Technorati Tags: Nortel
Nortel moved a major step forward in finally putting its accounting scandal behind it after two U.S. judges approved a $2.25-billion class-action lawsuit settlement. U.S. District Judge Loretta Preska said the global settlement reached earlier this year is “fair, reasonable and adequate” to compensate people or entities who bought common stock or sold options on Nortel stock between April 24, 2003, and April 27, 2004. U.S. District Judge Richard Berman said a similar deal reached on behalf of as many as 1.4 million Nortel investors between Oct. 24, 2000, and Feb. 15, 2001, is fair and adequate. The lawsuits involve allegations that Nortel executives, including ex-CEO Frank Dunn, cooked the books to trigger lucrative bonus plans.
Looks like ex-Nortel CEO Frank Dunn and Nortel may be able to escape being investigated by the Ontario Securities Commission. In an appeal, the OSC said it would not be possible to continue the probe unless a decision is overturned that restricts the OSC from questioning Dunn, who was fired with cause two years ago. “To do so would disqualify all those who have been involved in the investigation to date from participating,” OSC’s lawyer Allan Rock said in a Sept. 15 filing requesting that the Ontario Court of Appeals hear the case. That “would effectively end an important investigation that has been under way for more than two years.” According to Bloomberg, Dunn has argued that any testimoney he provides will be gives to the SEC and could be used in a U.S. criminal investigation, which would violate his right against self-incrimination. The Ontario court considering the the OSC’s appeal hasn’t said whether it will hear the two sides’ arguments.
The Ottawa Citizen has a story today – actually a Q&A – looking at Nortel’s class-action lawsuits – two of which were settled earlier this year for $2.4-billion. Investors, however, should also keep in mind there are still RCMP, OSC, FBI and SEC investigations happening that involve the company’s accounting scandal. The Citizen also has a story looking at Nortel’s two-year battle to recover pirated copies of a key piece of software called GenKey.
Nortel and Ciena Corp. have settled two patent lawsuits filed in Texas over the use of telecommunications equipment by agreing to let each other use the products involved in the suit. In January 2005, Ciena accused Nortel of infringing six patents related to communications networking systems. Nortel countersued, and accused Ciena of infringing 13 of its patents.
There’s always a new drama at Nortel. Amnesty International launched a global campaign yesterday against Internet repression, which it claims involves companies that aid in censorship and repression of freedom of speech. Amnesty’s hit list also includes Sun, Cisco, Yahoo! and Google. “From Iran to the Maldives and Cuba to Vietnam, governments are both cracking down on those who use the Internet to communicate their ways and denying citizens access to its wealth of information,” Amnesty said. “Web users are locked up, Internet cafes are shut down, chat rooms are policed and blogs deleted. Websites are blocked, foreign news banned, and search engines filter out sensitive results.” Nortel has also been cited by human rights activists for a contract it has with the Chinese Ministry of Railways to build a wireless network into Tibet.
For investors who bought Nortel shares or options between Oct. 24, 2000 and Feb. 15, 2001 or between April 24, 2003 and April 27, 2004, you are eligible to be compensated by the $2.4-billion class-action lawsuit settlement. According to the Toronto Star, 600,000 investors should be receiving 33-page notices in a few weekse givng them the option of filing objections, opting out of the settlement, or sending proof of claim to receive a combination of cash and stock. More information will be available on whether you qualify at Nortelsecuritiesligitation.com.
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.