Lucent Technologies has agreed to pay a $25m civil penalty for "lack of co-operation", after a three and a half year investigation by US regulator the Securities and Exchange Commission (SEC).
The SEC's complaint alleges that Lucent fraudulently and improperly recognised approximately $1.14bn of revenue and $470m in pre-tax income during its fiscal year 2000.
It claims that Lucent's violations of generally accepted accounting principles were due to the fraudulent and reckless actions of the defendants and deficient internal controls that led to numerous accounting errors.
The SEC claims that Lucent executives violated Lucent's internal accounting controls, falsified documents, hid side agreements with customers, failed to inform personnel in Lucent's corporate finance and accounting structure of the existence of the extra-contractual commitments or, in some instances, took steps to affirmatively mislead them.
The regulator charged Lucent with securities fraud, and violations of the reporting, books and records and internal control provisions of the federal securities laws.
Nine current and former Lucent officers, executives and employees, and one former Winstar Communications Inc officer were charged.
Lucent and three of the former Lucent employees have agreed to settle the case without admitting or denying the allegations.
The company said that it has addressed these issues with increased controls and disclosures in the organisation.
Patricia Russo, chairman and chief executive at Lucent, said in a statement: "We are closing this chapter in our history, putting it behind us and focusing on moving our business forward."
The SEC confirmed that it will litigate this case against the remaining seven defendants.
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