Securities class action suit filed against Nokia directors

Multiparty litigation pending in New York district court; trial would start this summer at the earliest

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Nokia and its top management purposefully misled investors between the autumn of 2003 and the spring of 2004 by distributing information about the company's business activities they knew to be false.
      When the truth finally came out on 6 April 2004, Nokia's stock price plummeted, the firm's market value depreciated by no less than 17 billion dollars in one day, and those having invested in the company suffered huge losses, which Nokia and its six top executives have to make up for with interest.
      The amount of the claimed compensations will be specified during the course of the legal proceedings.
      Such a summary can be drawn to describe the multiparty securities fraud class action suit filed against Nokia and its directors in a New York district court.
      The legal process was launched in April last year on the day when Nokia published its unexpectedly low sales figures for the first quarter, which then led to the decline in the share price.
     
After the filing of the complaint, written communication is expected to start between the involved parties.
      Nokia has been given until 8th March to respond to the allegations, and the plaintiffs will then have a month to comment on Nokia's response.
      A possible court case would not start until the summer at the very earliest.
      The two parties also have the possibility to resort to an out-of-court settlement at any time. Settling the case would prove expensive for Nokia, which is convinced that it has not rendered itself guilty of any wrongdoing.
      For Nokia, a trial might also turn out to be a costly and time-consuming alternative, however. For the plaintiffs the entire litigation process is free. Provided that compensation is to be paid, the law firm representing the plaintiffs will take its remuneration as a percentage of the award.
     
The extensive list of claims goes through in detail the activities and public statements of Nokia and its six top executives during the autumn of 2003 and the spring of 2004.
      Among other things, the statement of claims painstakingly looks over almost word for word the speeches that Nokia directors gave at a stock analysts' conference in Dallas in November 2003.
      The tone of the speeches is said to have been positive, despite the fact that the directors were well aware that Nokia's product range was deficient, the market share was in decline, relationships with mobile operators were poor, and the new N-Gage game phone was a complete flop.
      Furthermore, Nokia is also accused of glossing over its interim report result.
      The complaint requests that the case be handled as a normal trial involving a jury.


Previously in HS International Edition:
  Brokerage companies change ratings of Nokia stock after profit warning (8.4.2004)
  Nokia stock tumbles 17% on profit warning (7.4.2004)

Links:
  Nokia press release (April 7, 2004)

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