Nokia shareholder, Robert Chmielinski has filed a class action lawsuit against company CEO Stephen Elop and CFO Timo Ihamuotila claiming that they misled and defrauded its shareholders by making false statements regarding the company turnaround due to strong Lumia sales between October 2011 and April 2012. Chmielinski said that the partnership with Windows Phone did not improve Nokia’s smartphone market and led to significant loss to its shareholders. He also said that Elop, Ihamuotila, and Nokia “engaged in a scheme to deceive the market” and he used press releases in his argument to show that the statements were “materially false and misleading because Nokia’s migration to a Windows platform was not going as well as represented.”
Chmielinski complaint says:
Nokia provides telecommunications infrastructure hardware, software, and services worldwide. During the Class Period, defendants told investors that Nokia’s conversion to a Windows platform would halt its deteriorating position in the smartphone market. It did not.
This became apparent on April 11, 2012, when Nokia disclosed that its first quarter performance would be worse than expected. Nokia expected its first quarter 2012 non-IFRS Devices & Services operating margin to fall by 3%, and projected first quarter 2012 Devices & Services net sales of €4.2 billion.
It also disclosed a glitch in its newest Windows offering – the Lumia 900. Nokia had to immediately offer customers an automatic $100, making the phone essentially free.
As a result of this disclosure, the price of Nokia’s American Depositary Shares (“ADRs”) dropped over 16% in a single day.
It goes on to say:
During the Class Period, defendants had both the motive and opportunity to conduct fraud. They also had actual knowledge of the misleading nature of the statements they made or acted in reckless disregard of the true information known to them at the time.
In so doing, the defendants participated in a scheme to defraud and committed acts, practices and participated in a course of business that operated as a fraud or deceit on purchasers of Nokia securities during the Class Period.