Welcome to the Nortel SEC Fair Fund Website
If you purchased Nortel common stock between October 24, 2000 through the close of the markets on February 15, 2001 and/or April 24, 2003 through the close of the markets on April 27, 2004 (the "Recovery Period"), you may be eligible for compensation.
On October 15, 2007, the Securities and Exchange Commission (the "SEC") filed its Complaint in this action alleging that Nortel Networks Corporation ("Nortel") engaged in two fraudulent accounting schemes, one involving revenue recognition fraud and the other involving earnings management fraud, which enabled Nortel to meet the unrealistic revenue and earnings guidance that it had provided to Wall Street in 2000 and again in 2002 and 2003. Without admitting or denying the allegations in the SEC's Complaint, Nortel and Nortel Networks Limited (together, the "Company") consented to a Final Judgment entered by the United States District Court for the Southern District of New York (the "Court") on October 25, 2007. As required by the Final Judgment, the Company paid to the Clerk of the Court disgorgement of $1 and a civil penalty of $35,000,000, which the Clerk deposited into an interest-bearing account with the Court Registry Investment System ("CRIS").
In a related SEC action against former executives of Nortel, without admitting or denying the allegations in the SEC's Complaint against them, certain defendants, Craig A. Johnson, James B. Kinney and Kenneth R. W. Taylor (the "Settling Officers") consented to Final Judgments entered by the Court on May 2, 2008, which required them to each pay a civil penalty of $75,000 plus disgorgement including prejudgment interest in the amount of $88,031, $68,481 and $68,481, respectively, to the Clerk of the Court. The funds paid by the Settling Officers – in the aggregate amount of $449,993 – were deposited by the Clerk of the Court into the CRIS. As of October, 2011, the balance of the funds held with the CRIS was approximately $35.5 million.
The Final Judgments provided that the SEC may propose a plan to distribute the deposited funds, subject to the Court's approval, pursuant to the Fair Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. On October 29, 2009, the SEC submitted its Motion to Create a Fair Fund and Appoint a Distribution Agent, which was approved by order dated November 2, 2009 (the "Order"). The SEC Fair Fund consists of all of the funds paid by the Company and the Settling Officers which were deposited into the CRIS, plus accrued interest. The Order also appointed The Garden City Group, Inc. ("GCG") as Distribution Agent to assist in developing a Distribution Plan pursuant to which monies in the SEC Fair Fund will be distributed to investors harmed by the violations alleged in the Complaints. The Order also authorizes the Distribution Agent to oversee the administration of claims and the distribution of the SEC Fair Fund pursuant to the terms of the Distribution Plan, in coordination with the staff of the SEC, and subject to oversight by the Court. The Court approved the Distribution Plan on October 5, 2011.
The SEC Fair Fund is separate and independent from the settlement funds previously established in the securities class action litigations involving Nortel, which were brought in the United States District Court for the Southern District of New York, the Ontario Superior Court of Justice, the Superior Court of Quebec and the Supreme Court of British Columbia (the "Nortel Class Actions"). However, like the Nortel Class Actions, the SEC Fair Fund relates to purchases of Nortel common stock during the Recovery Periods of October 24, 2000 through the close of the markets on February 15, 2001 and/or April 24, 2003 through the close of the markets on April 27, 2004.
To be potentially eligible to participate in the SEC Fair Fund, claimants (except for certain participants in the Nortel Class Actions) must submit a completed Proof of Claim Form. Investors whose claims were previously approved in the Nortel Class Actions are automatically deemed eligible claimants with respect to transactions for which a claim was previously approved in those class actions, so long as those approved transactions calculate to an Eligible Loss under the Plan of Allocation for the SEC Fair Fund, and do not need to do anything further at this time to participate in the SEC Fair Fund.
If you are a custodian, trustee or professional investing and claiming on behalf of more than one potentially eligible claimant in a pooled investment fund or entity, you will be required to complete a certification attesting that any distribution you receive will be allocated for the benefit of current or former investors and not for the benefit of management. You may obtain a copy of the certification form here.
The deadline for receipt of Proof of Claim Forms by the Distribution Agent was on March 16, 2012.
If you have additional questions, please call (888) 561-9182 or send an email to
You can also visit the Securities and Exchange Commission's website by clicking here.