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Nortel Litigation Settlement

For those investors/speculators who purchased Nortel shares between Oct. 24, 2000 and Feb. 15, 2001 or between April 24, 2003 and April 27, 2004 , you may have been eligible for a piece of the Nortel class action lawsuit. I received that letter a few years ago acknowledging the lawsuit so I submitted my proof of ownership to see what would happen soon after. To be honest, I didn’t have very high expectations.

When I posted about my biggest investing mistake, I painfully explained how I purchased shares of Nortel while I was on work term with, who else, Nortel. This was back in late 2000/early 2001 when the shares fell from it’s high of $120 down to around $60.

As a student, I thought that no one could lose buying Nortel at a 50% discount! Boy was I wrong, I put a portion of my life savings ($3,000) to buy the “bargain”. As we all know now, Nortel isn’t worth much. In perspective, today the stock is worth $0.80 pre-reverse split ($8.00 after their 10-1 reserve split). Imagine the killing I would have made if I had shorted the stock at $60 instead of buying! Hindsight is 20/20.

Back to the Nortel class action lawsuit and settlement. I submitted my information a few years ago not expecting much in return.  Years have past, and I was convinced that I didn’t qualify for a portion of the settlement.  Low and behold when I least expected, I received a letter from the litigation lawyers late last week!

The letter explained that all qualified claims were entitled to 7% of the “recognized claim“.  The letter then went on to explain what my “recognized claim amount” was with an attached cheque as my piece of the settlement.  I must admit that I was a little disappointed that they considered my recognized claim to be only $545 USD.  However, I’ll also admit that I didn’t dig too deep to figure out how it was calculated.

Out of the $3000 or so that I lost, I received a cheque for $41.02 CAD.  Yes, you read right, forty one dollars.   It’s $41 that I didn’t expect, but somehow it’s still unsatisfying.

If the Nortel Class Action lawsuit or settlement affects you, you can find the official information here.

Did anyone here submit information to the Nortel litigation lawyers for a piece of the settlement?  If so, how much did you get back as a portion of your loss?

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FT About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 14 comments… add one }
  • David Carter May 19, 2008, 1:45 pm

    Oh man that sounds like it was rough. I know that had to hurt losing all that money. I wasn’t reading your blog back when you first wrote the story so this is news to me. I have read somewhere that people feel twice as much pain for every dollar they lose as opposed to every dollar they earn. Hopefully you learned something from it and are now better for it. Its good to make the mistakes when you are young anyway.

  • Dividend Growth Investor May 19, 2008, 1:54 pm

    FT,

    You have learned a valuable lesson however which will bring you much more than the $3000 you have lost. You have learned to have strategy, not chase the hottest things out there and buy stuff you know. Buy stable companies which are boring , yet you can clearly see how they make money..

    Btw 8 years later, the biggest stock in Canada is once again a tech company. I wonder if history will repeat itself or not..

  • Matt May 19, 2008, 2:56 pm

    Meanwhile, the attorneys probably got about 40%of the total settlement = a killing. Class action lawsuits are usually a joke and only make the attorneys rich. Your situation is a perfect example of that.

  • FT FrugalTrader May 19, 2008, 3:13 pm

    I agree, I’m thinking that these type of litigations might not even be worth it. Not unless I held a huge position, then it might be worth the hassle.

    DG, I had the same thoughts about RIMM. I know that they are hot, but what goes up…

  • Jordan Clark May 19, 2008, 4:29 pm

    I’m curious, not that I expect any settlement, but how does this pertain to someone who was holding mutual funds at the time that were all heavily weighed down with Nortel? This is when I learned the lesson of “know what you own” after finding virtually all of my mutual funds were holding Nortel. Even with mandates like European Growth, or US Large Cap, talk about “style drift”. I don’t know how much I lost exactly, but I’m guessing those mutual fund companies that helped me lose a nice chunk of change will be getting my portion of the settlement right?

  • Jordan Clark May 19, 2008, 4:34 pm

    Frugal, sorry this is unrelated, but I also just noticed the part about you working at Nortel on my second read through of the article.

    I got to wondering have you ever told us what your profession is? It’s not on the About Me page… Are you a day trader, high tech worker or something else? Just curious because I’m in high tech myself.

    Cheers,
    Jordan

  • FT FrugalTrader May 19, 2008, 4:38 pm

    Jordan, that is an interesting point about mutual funds, perhaps the mutual fund companies get the litigation money and perhaps pass it onto their share holders?

    I’m an Engineer, you can find out more about me here:
    https://www.milliondollarjourney.com/ive-been-tagged.htm

  • nobleea May 19, 2008, 9:03 pm

    Heh;

    I also worked for Nortel in Calgary during my last work term (Jan-Aug 2000). I was offered a full time job for when I graduated 8 months later. Of course, by then the job offer had disappeared. Not even a year later, the plant was moved to Mexico.

    I do remember co-workers talking about buying pre split since it ‘always’ goes up afterwards (this was around $100).

  • shervin May 20, 2008, 3:01 am

    never had the money to buy the stock in 2000 era however, I bought into Nortel with some of my student loan in 2003 .

    To be exact I bought 200 Shares at 7$ each in 2003 time.Then it tanked again to around 3$ and I decided to take my losses and move on. so about 700 loss in about 1 year or -50% . I applied for Litigation II since I fell in that period with no expecations and last week I received a whopping 5 shares of Nortel paper certificate plus 54$ as a cheque.

    Life will go on. the best is to take the life by the horn.

    cheers,

  • Sparrow May 20, 2008, 3:57 pm

    For what they did to cause their stock to tank, yes, the company officials that cooked-the-books and took money out of the company in unjustified-bonuses – I would have been more happy knowing that they [the dishonest, cheaters and liars that they are] have gone to jail and thrown away the keys than accepting any kind of money or shares in a company that no one can trust!

    How can we stop this kind of thing from happening again if there is no penalty of incarceration or at the least some kind of castration so these kinds of people can’t contribute to the gene pool anymore! Laugh at this but it is real! They need to be eliminated from contributing to our society – but maybe on Mars they could live!

    It absolutely blows me away that people like this can get away with what they did – and the “company” is held liable for their actions – it should be the crooks going to jail for a longtime that did this –> that would be the best settlement or outcome so it can act as a deterrent to others, and help to prevent this from happening to another company!

  • ETF Income May 23, 2008, 5:39 pm

    I still didn’t get a cheque yet..how much do each person get per 100 share?

  • ETF Income May 23, 2008, 5:39 pm

    I called into the NT Litigation hotline, however, they told me that I haven’t submit the correct documentation. Great! They told me to send in the correct documentation now but no guarantee that I will get anything…ughhh…any advice?

  • gene June 19, 2008, 11:13 am

    I lost $ 37,000 of my principal investment on Nortel stock. I sold good stocks ( Transcontinental Pipe Line at $12/share ) to finance buying Nortel during the stock value slide all the way from $120/ share to $ 12/ share, when I ( realizing this was not smart ) stopped. I still hold the stock, all 121 shares ( after 1:10 adjustments ) but entertain the idea of selling, realizing “real/true ” loss and then making a claim against Nortel.

    When approached by Law Firms to join in class action I declined-as you said- only the law firms benefit.

    Question: As a damaged party, what opportunity have I to recoup some of my damages. Has any individual investor taken a legal action and/or succeeded against Nortel ?

  • arest fraud November 5, 2008, 11:42 pm

    oh my God that I am so stupid to buy this monster stock Nortel from $6,5 &3 totally >4000 stocks value $22000 after it combined from 10 to 1 from about $10 but now its CEO KILL ITSELF NOW TO ONLY AS LOW AS $1.24 making my life threatening loss of >$18000….oh if there’s GOD should have NT DELISTED TO AVOID ITS KILLING POWER IN CANADIAN STOCK HISTORY AND ALL FRAUD ARRESTED LIKE BUSH TO JAIL !……ALL VICTUM MUST STAND UP TO SUE FOR THIS FINANCIAL CRISIS …;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;; the worst is that my wife got Cancer in 2008 that 1 out of 3 is likely to get this threatening disease….why the drug stocks are so cheap without let it to kill all human beings ?

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