The struggling cellphone company BlackBerry can add another woe to their list of concerns. A shareholder lawsuit has been filed against BlackBerry amid allegations of misleading investors. The class-action lawsuit could represent thousands of shareholders with stock in BlackBerry.
The allegations in the shareholder lawsuit claim that BlackBerry misled investors about the future of the company, including how their new smartphone product line would do against competitors in the marketplace. The lawsuit also alleges that BlackBerry executives misrepresented the company's operations.
Specifically, the lawsuit claims that BlackBerry misled shareholders by saying that developers thought the new BlackBerry 10 platform would be competitive in the market, and that the company was seeing improvement in their "financial and operational commitments," according to the lawsuit. The lawsuit cites specific examples of news releases and conference calls by executives showing that they misled investors about BlackBerry's financial performance and reviews of their new platform.
The lawsuit also states that after the BlackBerry 10 platform was launched, it did not do well in the market. In fact, the lawsuit says the new platform performed so poorly that BlackBerry had to lay off roughly 40 percent of their total workforce. As a result, BlackBerry's stock price has declined and shareholders have suffered financial losses due to BlackBerry's misrepresentation.
BlackBerry has not done very well during the last few months. After the company announced the layoffs, BlackBerry's share price fell by 25 percent. BlackBerry representatives have not commented on the pending litigation and said the company is reviewing the lawsuit.
This case is an example of the legal action shareholders can take against a company if they believe the company has lied or misled investors. Allegations of misrepresentation and other shareholder disputes can be difficult to navigate so individuals considering legal action should consult a business law attorney to discuss their specific cases.
Source: USA Today, "BlackBerry facing shareholder lawsuit," Oct. 7, 2013