...this matter solely relates to the personal investment transactions made by Terry Hungle

Nortel president

Enron's failure has also highlighted issues of insider trading.

Enron executives who sold shares while staff were barred from doing so face lawsuits.

Nortel, which is Canada's largest company, said Mr Hungle had carried out transactions "outside the trading windows" imposed by the corporation on certain employees and "prior to news releases" issued by the company.

Purely personal

Both sets of transactions allegedly preceded the release of information about job losses and profits which had the potential to hit the firm's share price.

The firm was at pains to stress that the transactions involved only Mr Hungle's personal retirement fund.

"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," said Mr Dunn.

Job cuts and profit warnings

Mr Hungle transferred about $78,500 (�55,209) in Nortel shares to a fixed income fund in March 2001, said Nortel.

Shortly afterwards, the firm revealed it would cut 5,000 jobs and miss its profits targets.

In December 2001, Nortel said, Mr Hungle transferred $86,300 from fixed income fund to stocks.

Later that month, Nortel said profits would be better than expected for the final quarter of 2001.

Restructuring

Nortel has been struggling to adjust to the downturn in demand which has hit other major firms in the telecoms sector.

During last year it cut about 50,000 jobs, or half its workforce, and outsourced much of its production to save costs.

Mr Hungle become chief financial officer in November 2001.

Prior to that, he was the firm's vice president for finance and business development, Americas.

The announcement of his departure came after Wall Street's close for the day, though Nortel's shares fell 3 cents in after-hours trading and were temporarily suspended at $6.81 per share.