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October 6, 2013

BlackBerry in shareholder lawsuit

Lawsuit representing thousands of shareholders claims company misled investors.

By Ben Sullivan

A class action lawsuit has been filed against BlackBerry by a shareholder, claiming that that the company misled investors about its future.

One of they key issues is how Blackberry ‘deceived’ investors about how the BlackBerry 10 phone would fare against its competitors.

The lawsuit seeks to represent thousands of shareholders who purchased BlackBerry stock from 27 September 2012, to 20 September 2013, a period in which it alleges executives misrepresented the state of BlackBerry’s operations.

According to shareholder Marvin Pearlstein, in a lawsuit filed in a federal court in Manhattan on Friday, the Canadian-based BlackBerry misled investors last year by saying the company was "progressing on its financial and operational commitments," and that previews of its BlackBerry 10 platform had been well received by developers.

"In reality, the BlackBerry 10 was not well received by the market, and the company was forced to … lay off approximately 4,500 employees, totaling approximately 40% of its total workforce," he said.

BlackBerry’s chief executive, Thorsten Heins, and chief financial officer, Brian Bidulka, were also named as defendants. BlackBerry has said that they are "reviewing the matter."

Last month BlackBerry disclosed that it would book nearly $1bn in losses.

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The lawsuit claims that the recent tumble in BlackBerry stock was a direct fallout from the executives’ misrepresentation of BlackBerry’s financial state.

Since 20 September, when the company disclosed the massive loss and layoffs, BlackBerry’s share price has fallen 25% on the Nasdaq in New York.

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