“The chief financial officer of Nortel Networks (news/quote) was forced to resign yesterday after the company said it had notified regulators of suspicious trades in his 401(k) retirement account,” writes Floyd Norris in today’s Wall Street Journal.

“According to the company, Terry G. Hungle, a 20-year Nortel employee who was named chief financial officer in October, moved money out of Nortel stock soon before the company announced a lower revenue forecast last March and moved it back into the stock in December soon before Nortel announced relatively good news on new credit arrangements.”

“The amounts involved were relatively small; Nortel said Mr. Hungle moved about $78,500 out of Nortel stock to a fixed-income fund in March and moved $86,300 back to Nortel stock in December. At the time of the first trade, he was vice president for finance and business development.”

“Mr. Hungle, who is 48 and lives in Dallas, declined to discuss the matter after being reached at his home yesterday afternoon. ‘There’s nothing to say; thank you,’ he said before hanging up.”

“Nortel said that by moving money in and out of Nortel stock in his 401(k) account soon before the announcement, Mr. Hungle had violated company rules concerning when senior executives could make such moves. It said it had notified regulators at the Ontario Securities Commission in Canada, where Nortel is based, and the Securities and Exchange Commission in the United States.”

“Nortel did not give the dates of Mr. Hungle’s trades, so it is hard to assess just how profitable they were. But it appears unlikely that Mr. Hungle saved more than $23,000, at most, from his trade in March, and that he made less than $15,000 with the December trade. The amounts could have been substantially less, depending on the timing.”

“Nortel, formerly Northern Telecom, went from being a dull telephone equipment maker to an exciting Internet company in the late 1990’s, with its share price peaking at $89 in the summer of 2000. But like many other telecommunications suppliers, its share price plunged after the Internet bubble burst. In New York, shares of Nortel closed at $6.84 yesterday, up 55 cents. Mr. Hungle’s resignation was disclosed after the close of trading.”

“Last March 21, Nortel disclosed that its first-quarter revenue was likely to be lower, and its loss larger, than it had previously anticipated. The company’s shares, at $16.76 that day, fell to $14 the next day and to $12.88 a few days later.”

“Mr. Hungle evidently had not expected such bad news a month earlier. According to records filed with the Ontario Securities Commission, he bought 3,000 shares in his own account last Feb. 20, paying $18.97 a share.”