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It’s not Over for Blackberry as Company is sued for Share Manipulation

It’s not Over for Blackberry as Company is sued for Share Manipulation


It’s not Over for Blackberry as Company is sued for Share Manipulation

Blackberry as Company is sued for Share ManipulationNEW YORK – On Saturday, Blackberry (NASDAQ:BBRY) and two executives were sued by an investor who alleges the company issued false and misleading information with the purposes of inflating the company’s stock.

According to Marvin Pearlstein, the investor in question alleges that BlackBerry Chief Executive Officer Thorsten Heins and Chief Financial Officer Brian Bidulka engaged in a scheme to deceive investors about the company’s health and prospects for the BlackBerry 10 product line of smartphones.  The lawsuit claims the company and its executives made false and misleading statements in a September 27, 2012 press release when the company claimed the new phone would ‘drive improvements across the company.’

Furthermore, Heins is accused of claiming on the same day that the company ‘continues to be a financially strong company, and we’re executing and delivering on our commitments and that it remains a strong, innovative, and relevant player in the mobile computing world.’  The comments were made during a call to investors.

However, customers did not welcome the Blackberry 10 and most carriers have stopped ordering the phones and are trying to unload what inventory they have with deep discounts.  In the last quarter,  the company needed to write down near $ 1 billion in inventory costs and further reorganization will leave another 4,5000 Blackberry employees without jobs – roughly 40 percent of the company’s workforce.

The lawsuit also seeks to include as plaintiffs shareholders who suffered unspecified damages after buying shares in Blackberry from September 27, 2012 to September 20 of this year.  Further allegations are that the company misreported its situation to the U.S. Securities and Exchange Commission – charges that could bring criminal liability against the executives involved.

Blackberry is currently in the process of sealing a $ 4.7 billion buyout deal with its largest shareholder, Fairfax Financial Holdings Ltd. Shares in Blackberry closed $ 7.69 on Friday; the buyout offer was priced at $ 9 per share.  Given the continued falling share price, Fairfax might try to renegotiate the offer as it is clear that no one else will submit a bid to purchase the company before the November 4 deadline.

Company spokespeople did not comment on the lawsuit.

About Eric Kelso

Eric Kelso covers market updates and stock related news.

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