The suit, which is seeking C$6 billion ($3.9 billion) in damages, alleges the company used practices such as extending financing to uncreditworthy customers so they could buy Nortel equipment and pulling forward revenues from 2001 through 2003 to bolster results in 2000.

The allegations come at a sensitive time for equity markets, which are still reeling from multibillion U.S. accounting debacles ranging from Enron Corp. to WorldCom Inc.

The suit was filed in the Ontario Superior Court of Justice by Toronto-based law firms Rochon Genova and Lerner & Associates. The plaintiffs include a doctor, farmer and teacher who invested in Nortel when the company was still a stock market darling.

Also named in the suit were former chief executive John Roth, current CEO Frank Dunn and other company officers.

Deloitte was named in the suit for allegedly failing to warn shareholders of facts that would have led to changes in Nortel's accounting practices.

"The allegation is that there was some negligence associated with their audit function and it's not a claim based on fraud against Deloitte & Touche," said Joel Rochon, a partner with Rochon Genova.

"I think it's important to note that we are not pleading fraud in the claim."

Nortel, one of the world's biggest makers of telecoms equipment, has been hit with a number of class action lawsuits as its stock has fallen from its peak of more than C$124 a share to C$2.10 on Wednesday.

The company denied the latest allegations and said they will fight them in court.

"This is essentially an amendment of a suit that was filed in the Ontario Superior Court of Justice February 23, 2001," said company spokesman David Chamberlin.

"Nortel Networks believes this suit is without merit and we will continue to vigorously defend ourselves."