Nokia class action complaint: first look

Last Updated on Monday, 8 February 2010 11:02 Written by info Monday, 8 February 2010 11:02

Several firms have filed shareholder class action complaints charging Nokia and certain Nokia officers and directors with violating Section 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC Rule 10b-5.

The complaints vary but all have the same basic allegations:

• that Nokia is a publicly listed manufacturer of mobile devices, and provides Internet services and digital map information worldwide.
• that in a class period from January 24, 2008 to September 5, 2008, Nokia shares and ADS were fraudulently inflated
• that defendants failed to disclose material adverse facts about Nokia’s true financial condition, business and prospects. Specifically, defendants failed to disclose: (a) that positive statements about Nokia’s product launches lacked reasonable basis especially in light of a component supply shortage and manufacturing problems; (b) that Nokia was losing market share due to intense price cuts by competitors; and (c) that defendants failed to disclose Nokia had dramatically slashed its ASPs (average selling prices) to maintain market share.
• On September 5, 2008, Nokia issued a press release announcing its third quarter 2008 outlook, and held a conference call.  In the call, Nokia cited a production glitch with a mid-range device and described price cutting on low end models by its competitors.
• In response to these statements, Nokia ADS prices on the New York Stock Exchange (NYSE:NOK) dropped approximately 8%, to $20.62, on heavy volume.