Nortel said that last March, while he was still a vice-president of finance and business development, Hungle transferred an investment of about $78,500 from a company stock fund within his 401(k) to a fixed income fund – just prior to the firm’s announcement that it would miss reduced earnings targets and cut 5,000 jobs. Then in December – just before Nortel said it would lose less than expected – Hungle transferred $86,300 from the fixed income back to the stock fund.
Nortel’s stock fell 16% on March 28, the first trading session after the earnings warning, and rose 13% between December 20 and December 24, the next trading day after the December announcement, according to Dow Jones.
Hungle, who has worked for Nortel for some 20 years, was named CFO on October 2.
Nortel, which has voluntarily notified the SEC and the Ontario Securities Commission of the activities, said the transactions took place outside ‘trading windows’ imposed by the company on certain officers – rules generally applied to executives with insider information.
While Enron-related concerns abound, the Canadian telecommunications equipment maker stressed that the transactions in question related to Hungle alone.