The regulator says it's no longer in the public's interest for it to pursue the allegations against ex-CEO Frank Dunn, ex-CFO Douglas Beatty and ex-controller Michael Gollogly. The OSC allegations were originally filed in March 2007.
An Ontario judge found Dunn, Beatty and Gollogly not guilty of fraud last year.
The three were fired in 2004 and accused of being involved in a book-cooking scheme to trigger $12.8 million in bonuses and stock payments to themselves.
At its height in 1999 to 2000, Nortel was worth nearly $300 billion, employed more than 90,000 people globally and was regarded as one Canada's most valuable companies.
In 2009, the company filed for bankruptcy in North America and Europe, shedding thousands of jobs.
On Thursday, an American court approved a settlement that will permit Nortel's American bondholders to be elgible to receive about US$1 billion in interest that has built up since the company filed for court protection from creditors almost six years ago.
But Canadian and U.S. courts have yet to decide how $7.3 billion of remaining cash will be allocated among Nortel's Canadian, American and European units.