Nortel Says CFO Quit Over Broken Stock Rules

TORONTO – Nortel Networks Monday said its chief financial officer, Terry Hungle, had resigned after buying and selling company stock within his retirement plan in ways that violated company policy.

The Canadian telecoms equipment maker, one of the world's biggest, took pains to stress in a statement that the transactions related to Hungle alone, and were not part of a wider, Enron-style accounting or financial scandal.

Global markets have been on edge in recent weeks for signs of financial and accounting problems similar to the ones that sank energy giant Enron.

Nortel said securities regulators in the United States and the Canadian province of Ontario had been voluntarily notified about the transactions.

Nortel chief executive Frank Dunn was named as the telecoms equipment maker's acting chief financial officer.

"I will be working with the board of directors to appoint a new chief financial officer. This matter is unfortunate but the actions we have taken are in the best interests of Nortel Networks," Dunn said in a statement.

"Let me emphasize that this matter solely relates to the personal investment transactions made by Terry Hungle and does not relate to the business, operations or financials of Nortel Networks," he added.

The trades in question took place within Hungle's 401K plan, a U.S. retirement savings scheme.

Nortel said that in March last year, while he was a vice-president of finance and business development, Hungle transferred an investment of about $78,500 from a stock fund invested primarily in Nortel's common shares to a fixed-income fund.

The company said in December Hungle transferred an investment of about $86,300 from the fixed income fund back to the stock fund.

Nortel said the transactions took place outside "trading windows" imposed by the company on certain officers. Such rules usually apply to executives with insider information.

($1-$1.59 Canadian)