Raising Red Flags

Company: Nortel Networks. Problems: 11/19/03. In the 2003 audit, D&T informed the audit committee of material weaknesses in internal control: "...lack of compliance with established...procedures for monitoring and adjusting balances relating to certain accruals and provisions, including restructuring charges; and lack of compliance with established...procedures for appropriately applying generally accepted accounting principles to the initial recording of certain liabilities...."
Impact on Stock Price: 11/18 — open: 4.08; close: 4.04
11/19 — open: 4.07; close: 4.10
11/20 — open: 4.10; close: 4.07

Sources: Company filings; Compliance Week

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