Ericsson shareholders sued the vendor seeking $175 million to $300 million in damages over an investigation into its business practices in Iraq, claiming certain actions taken by the company depressed its share price.
A statement revealed a total of 37 shareholders had filed a claim against the vendor and more were expected to follow.
The shareholders state they are seeking damages over pecuniary losses linked to the company’s decision to withhold information about an internal investigation into its business practices in Iraq, including a report outlining the results.
In February 2022, the group of shareholders claim, Ericsson was forced to admit and provide brief information on the existence and contents of the report, after key elements were leaked to the media.
The admission of the report’s existence and contents, which came more than two years after the completion of an internal investigation, caused its share price to tank more than 25 per cent.
At the crux of the complaint, shareholders argue Ericsson failed to comply with the European Union’s Market Abuse Regulations, which obligates companies to release inside information as soon as possible. Instead, the complainants argue Ericsson had kept it “secret” for more than two years.
Ericsson has already been forced to pay the US Securities and Exchange Commission (SEC) $1.1 billion, after reaching a settlement in 2019 following a corruption probe. It then faced a fine of $207 million in March 2023 for failing to properly disclose information relating to the SEC probe.
However, the shareholders stated the fine issued earlier this year did not cover Ericsson’s actions in Iraq.