Swedish telecommunications giant, Ericsson, finds itself entangled in legal turmoil as thirty-seven shareholders collectively launch a lawsuit, seeking 1.8 billion Swedish crowns in compensation.
Alleging that the company’s CEO’s revelations regarding Iraq-related activities triggered a downward spiral in stock value, these shareholders, including investment firms and pension funds, are uniting in coordinated legal action.
CEO Boerje Ekholm’s handling of an internal inquiry into Ericsson’s Iraq operations, coupled with a controversy concerning potential dealings with the Islamic State, has drawn severe criticism over the past year.
In response to the legal challenge, Ericsson issued an emphatic denial, stating, “Ericsson disputes the claims in their entirety and intends to defend itself vigorously in this matter, which is unprecedented in Swedish litigation and contrary to fundamental principles of Swedish corporate law.”
The shareholders’ grievances revolve around the sharp decline in Ericsson’s shares since CEO Ekholm’s disclosure in February 2022.
The revelation, published by Dagens Industri, highlighted an internal report on the company’s Iraq activities, subsequently causing the share price to plummet.
Since then, the value has shrunk by half, settling at 52.71 crowns on Friday.
In a related development earlier this year, Nasdaq Stockholm scrutinized the company’s public disclosures related to the aforementioned report.
The outcome of this review stated, “cannot come to the conclusion that the content of the report was such that a reasonable investor would have used such information as part of his/her investment decision.”
The outcome of this lawsuit promises to hold significant implications for both Ericsson and the Swedish legal landscape, as the company stands resolute in defending its stance against the shareholders’ claims.