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Employment

Nortel CFO Leaves After Probe

In these days of SEC probes and FBI investigations, Nortel Networks Corp. (NYSE/Toronto: NT) isn't taking any chances. Its CFO, Terry G. Hungle, is leaving the building after allegedly transferring his 401K funds outside the permitted timeframe (see Nortel's Hungle Forced Out).

Hungle, a 20-year veteran of Nortel, served just over four months as CFO, taking over when Frank A. Dunn became CEO in October 2001 (see Nortel Swings Axe, Switches CEOs). Dunn will be doubling as CFO until the board can find a replacement for Hungle.

Despite his years with the company, Hungle appears to be leaving in disgrace, his wrongdoing clearly delineated in a statement issued by Nortel late this afternoon: "In March 2001 (at which time Hungle was vice-president, finance and business development - Americas), Hungle transferred an investment (of approximately US$78,500) from a stock fund investing primarily in the Nortel Network's common shares to a fixed income fund. In December 2001, Hungle transferred an investment (of approximately US$86,300) from the fixed income fund to the stock fund... These transactions occurred outside the trading windows imposed by the Corporation upon certain employees, including Hungle."

Each of those moves came shortly before major preannouncements by Nortel.

It may sound like relatively small potatoes -- and certainly not large profits for Hungle, considering the stakes of his CFO job -- but Nortel apparently wanted no taint of wrongdoing to foul its already beleaguered financial results. The company's statement makes it clear that Hungle's changes were unknown to the company when it issued its quarterly financial press releases on March 27 and December 21.

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
tjs 12/4/2012 | 10:57:33 PM
re: Nortel CFO Leaves After Probe
Compared to the scandal created when the CTO shorted NT stock these guys have got to be kidding.

optical_man 12/4/2012 | 10:57:31 PM
re: Nortel CFO Leaves After Probe tjs says:
"Compared to the scandal created when the CTO shorted NT stock these guys have got to be kidding. "

What CTO? Bill Hawe, the ex Bay guy? Do you have proof of this? Is this bashing by an ex employee?
Please add detail of this shorting. I'm curious about the allegation because this is the first I've heard of it (but how appropriate for it to surface on LR, the nat'l enquirer of high tech)
dodo 12/4/2012 | 10:57:24 PM
re: Nortel CFO Leaves After Probe Allegations of Hungle's trading activity stunned one corporate watchdog, Patrick McGurn, director of corporate programs for Institutional Shareholder Services, a firm that advises large investors on corporate governance and proxy issues.

"It's beyond belief," says McGurn, saying that he couldn't think of any other incident in which the chief financial officer of an S&P 500 company was said to have traded shares during the no-trading window.

If indeed the allegations about Hungle's trades are true, says McGurn, the burning question is, "How did such an idiot get to be a CFO of a major telecom company?"

What's especially bizarre, says McGurn, is why Hungle would take such a risk for $80,000. The current salary for Hungle, who was promoted to the CFO position in November after serving as president of finance, Nortel Networks Americas, couldn't immediately be determined. Nortel Prsident Frank Dunn, for purposes of reference, earned $1.5 million in salary and bonus as CFO in 2000, according to an SEC filing.

"You're not talking a huge return here," McGurn says.



gea 12/4/2012 | 10:57:23 PM
re: Nortel CFO Leaves After Probe This is clearly just the tip of the iceberg. Would they have let go of their CFO merely because he violated this trading window? And if that were such an obviously large infraction from the outset, then this guy clearly had something MUCH bigger he was oing after, and these transactions were only the tip of the iceberg.
Bascially, thi is Nortel washing their hands of this guy before the REAL shit hits the fan.
Come on Lightreading! Since you're the "National Enquirer" of the optical space, let's see you dig a lil' deeper...
fsubob 12/4/2012 | 10:57:23 PM
re: Nortel CFO Leaves After Probe Optical Man - I agree with you, tjs sounds like a disgruntled ex-NT employee
LightMan 12/4/2012 | 10:57:22 PM
re: Nortel CFO Leaves After Probe Hungle was only in the CFO job for 2-3 months. When the former CFO (Dunn) was promoted to Pres. he promoted the VP of Finance and BD to CFO.

From various reports, Dunn and Hungle went back many years and I am sure Dunn was pretty upset at Hungle for his either idiotic or blatent trading outside the trading window. It is one thing to sell once, but to buy back with almost the same amt. just prior to good news is a bit dense.

You have to wonder, if he believed that the 401k was not under the trading window like the ESPP and other options, a broker or someone made the trades for him, or something of the like. For only $75k, it is got to be a nit in his portfolio...

LightMan
//www.thesoftwareprompt.com
MajorKong 12/4/2012 | 10:57:21 PM
re: Nortel CFO Leaves After Probe "What CTO? Bill Hawe, the ex Bay guy? Do you have proof of this? Is this bashing by an ex employee?
Please add detail of this shorting. I'm curious about the allegation because this is the first I've heard of it (but how appropriate for it to surface on LR, the nat'l enquirer of high tech)"

The main rumor was that before the Nortel aquisition of Bay completed, the Bay CTO(yes, Bill Hawe) shorted Nortel stock against his Bay options. This cleverly avoided the prohibition on shorting Bay stock. The less well known rumor was that other exec's pulled the same stunt once word got out it was a legit move so he wasn't alone. This was a a hot topic of discussion throughout Bay during the time between the announcement of the acquisition and the actual close. It was very out in the open and there was some lame memo issued to the entire company that "No rules had been violated, blah, blah".
EzraTzvi3 12/4/2012 | 10:57:14 PM
re: Nortel CFO Leaves After Probe Has anyone thought about these improprieties not being the whole story? I find it hard to believe that a CFO would involve himself in only these two relatively small illegal transactions, if he's going to involve himself at all. It's kind of like Winona Rider shoplifting. Oh wait ... she did.
Nuetrino 12/4/2012 | 10:57:01 PM
re: Nortel CFO Leaves After Probe This reeks of a recently discovered decaying carcass.

However - this could be the first act of bravado from a from a man trying hard to be seen as a real CEO.

Think about the scenario, Bankers Trust manages the whole 401K program for Nortel - they would (or should) know the process and who is limited to the trading window.

By their fruits they shall be known...

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