Investors spanked Nortel ( NT) after the company revealed it is the subject of a federal investigation.Shares of the telecom-equipment maker fell 3% Monday after the Securities and Exchange Commission said it was formally investigating the company's accounting practices. Last month, the Canadian networking gearmaker suspended CFO Doug Beatty and Controller Mike Gollogly in the aftermath of a second financial restatement. In October, after initiating an internal audit, Nortel said it would restate its numbers for the past three years to fix some $900 million worth of accounting mistakes. Then last month, the company said it would restate the previously restated 2003 financial report and asked for an extension to file its annual report with the SEC. Nortel says it is examining the "establishment, timing of, support for and release to income of certain accruals and provisions in prior periods." Nortel was not more specific about the problem, nor did the company reveal what the SEC's investigation has focused on. Last month, financial sleuth John Gavin of SEC Insight said
Nortel rally subsides
On Monday, Nortel fell 17 cents, to $6.12.