RIM faces lawsuit over claims it misled investors
Mike Lazaridis, president and Co-Chief Executive Officer of Research In Motion, talks about his company's new BlackBerry Torch, in New York, Tuesday, Aug. 3, 2010. (AP / Richard Drew)
CTV.ca News Staff
Published Friday, May 27, 2011 10:17AM EDT
Research in Motion has been named in a class-action lawsuit that claims the Ontario-based maker of the popular Blackberry smartphone misled investors about the company's finances and business prospects.
The lawsuit, filed by Robbins Geller Rudman & Dowd LLP in the U.S. District Court for the Southern District of New York, alleges that RIM knew its outlook was worse than expected, but failed to warn its investors.
According to the complaint, RIM failed to disclose that a combination of "its aging product line" and delays in getting new products to market would have a negative effect on its profit margins.
The suit is seeking unspecified damages on behalf of those who purchased RIM shares in the four-and-a-half month period that ended on April 28, 2011.
That's when RIM released its most recent earnings and revenue figures, revealing that BlackBerry shipments would not only be lower than expected, but that the products available for sale would be priced down too.
Shares of the Waterloo-based tech company plunged 14 per cent in trading that day.
According to the complaint filed Thursday, the company and certain of its directors and officers, "issued materially false and misleading statements regarding the Company's financials and business prospects" in the preceding weeks and months.
Although it's not clear exactly what form the alleged deception took, the claimants are expected to argue they deserve compensation for sinking money into a company that was performing more poorly than it led the public to believe.
"As a result of defendants' false statements, RIM common stock traded at artificially inflated prices," the complaint states.
In its response released Friday, RIM outlined the company's commitment to "vigorously defend" itself allegations that "are without merit."
Although RIM has been the target of lawsuits in the past, those have centred around issues of patent infringement and corporate espionage. This latest lawsuit is the first from the company's own investors.
No court date has been set.
With files from The Canadian Press