BlackBerry faces allegations of illegally inflated stock price
The BlackBerry 10 phone hasnt sold like BlackBerry had hoped and now, one investor is looking to recoup his losses.
October 07, 2013 at 07:06 AM
2 minute read
The original version of this story was published on Law.com
Fresh off a complicated sale to Canadian investors and a falling stock price, cell phone manufacturer BlackBerry Ltd. is facing some trouble once again. This time, though, it's not to untangle the web of regulatory actions or revamp its financial strategy. It's to fight off litigation from an investor who claims the company purposefully made false and misleading statements about its prospects.
Investor Martin Perlman filed a proposed class action lawsuit in U.S. federal court on Oct. 3, claiming BlackBerry CEO Thorsten Heins and CFO Brian Bidulka schemed to deliberately deceive investors concerning the company's health and potential sales of the company's BlackBerry 10 line of phones.
BlackBerry has seen a declining share in smartphone market over the past couple years, while Apple and Samsung have taken the lead. In a Sept. 27, 2012, press release the company said that the BlackBerry 10 would “drive improvements across the company.” According to Bloomberg, the suit claims Heins furthered that message on a conference call later that day, saying, BlackBerry “continues to be a financially strong company and we're executing and delivering on our commitments.”
Perlman believes these actions were misleading to investors, since at the time Blackberry was in shambles. “In reality, the BlackBerry 10 was not well received by the market,” Perlman wrote in the complaint, “and the company was forced to write down a nearly $1 billion charge related to unsold BlackBerry 10 devices and lay off approximately 4,500 employees, totaling approximately 40 percent of its total workforce.”
Perlman says that the company's statements illegally bolstered the price of the company's stock, according to Bloomberg. Once the company's phone write-offs and employees layoffs were revealed on Sept. 20, the company's stock fell by 16 percent. The suit hopes to recoup damages for those shareholders who suffered because of the falling stock price between Sept. 27, 2012, and Sept. 20, 2013.
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