Abstract

The case discusses the accounting frauds committed at the US-based tele-communications giant, Lucent Technologies Inc. (Lucent) during early 2000. It provides an insight into the ways by which the financial statements were manipulated at Lucent. It examines the loopholes in the financial management of the company and the price it had to pay for circumventing the provisions of law. The case examines the allegations against Lucent and its officers with reference to the Securities Exchange Act, 1934. Finally, the case throws light on the damage control measures taken up by the new CEO to improve the company’s performance and restore investor confidence.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The need for sufficient internal control measures and transparency in the financial statements of a company. The provisions of the laws with regard to finance-related scandals and the consequences for misleading the investors.

Keywords

Case, Lucent Technologies, Accounting Scandal, Class Action Suit, Window Dressing, Financial Mismanagement, Accounting Fraud, Securities Exchange Act, Internal Control, US GAAP and Unethical Practices