Nortel CFO quits after 401(k) investments raise questions

TORONTO - Nortel Networks&#39; new chief financial officer resigned abruptly Monday amid questions about personal investments he made in a 401(k) retirement plan just ahead of corporate announcements that caused significant swings in the price of Nortel shares.<br> <br> Terry Hungle, who was named CFO late last year, allegedly transferred about $78,500 from a stock fund invested primarily in Nortel shares to a fixed income fund last March prior to the company&#39;s announcement that it would cut 5,000 jobs and would not meet reduced profit forecasts, Nortel said in a statement released after the close of markets Monday.<br> <br> He then transferred $86,300 from the fixed income fund to the stock fund in December, when Nortel said it would lose less than expected during the fourth quarter, the company said.<br> <br> Nortel said the transfers were made outside the trading windows the company imposed on certain employees, including Hungle, and were made prior new releases on potential market-moving information.<br> <br> Nortel said it has voluntarily notified the U.S. Securities and Exchange Commission and the Ontario Securities Commission about the personal investment transactions. The company said it would have no further comment.<br> <br> The news is another blow for Nortel as the fiber optics giant tries to recover from a disastrous 18 months in which its shares lost more than 90 percent of value and it has been cutting its work force in half.<br> <br> Chief executive officer Frank Dunn, who took over last year after being the chief financial officer, will assume Hungle&#39;s duties until a successor can be found, the company said.<br> <br> With international attention on questionable dealings by Enron in the biggest corporate collapse in U.S. history, Nortel emphasized that the resignation of Hungle involved personal investments.<br> <br> &#34;This matter is unfortunate but the actions we have taken are in the best interests of Nortel Networks,&#34; Dunn said. &#34;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.&#34; <br> <br>