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Saturday, December 07, 2013
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BlackBerry faces class action suit in US
BlackBerry Ltd and some key executives are facing allegations they misled investors on the state of the company’s future, and how its BlackBerry 10 would fare against competitors. A class action lawsuit filed by one BlackBerry shareholder claims leaders of the Waterloo, Ontario-based smartphone maker failed to tell investors that “the company was not on the road to recovery and re-emerging as a lead player in the wireless communications industry.”
“In reality, the BlackBerry 10 was not well-received by the market,” said the lawsuit, filed in a Manhattan court by shareholder Marvin Pearlstein on Friday. The class action suit seeks to represent “thousands” of shareholders who purchased BlackBerry stock from September 27, 2012, to September 20 of this year, a period in which it alleges executives misrepresented the state of BlackBerry’s operations. Also named as defendants in the lawsuit are chief executive Thorsten Heins and chief financial officer Brian Bidulka. None of the allegations have been proven in court, and a representative for BlackBerry was not immediately available for comment. Last month, BlackBerry disclosed that it would book nearly a billion dollars in losses related primarily to the writedown of unsold BlackBerry Z10 touchscreen smartphones, and also lay off about 40 per cent of its employees in an effort to reduce costs. The court filings outline numerous news releases issued by BlackBerry, as well as cite quarterly conference calls where it alleges executives “deceive the investing public.”
The lawsuit claims that the recent tumble in BlackBerry stock was a direct fallout from the executive’s misrepresentation of BlackBerry’s financial state. “The timing and magnitude of BlackBerry’s stock price decline negates any inference that the loss suffered by the plaintiff and the other class members was caused by changed market conditions, macroeconoimc or industry factors,” the lawsuit alleges.
Since September 20, when the company first disclosed the massive loss and lay-offs, BlackBerry’s share price has tumbled 25 per cent on the Nasdaq in New York. BlackBerry has faced numerous other class action lawsuits in the past. (Globe and Mail)
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