The disgruntled shareholders that filed a class-action complaint against Nokia, claiming that the company ‘misled’ its investors, are unlikely to be successful in their claim, a top lawyer has said.
The complaint was filed on May 3 by a New York law firm and alleges that the defendants, Nokia's CEO Stephen Elop and CFO Timo Ihamuotila, misled investors by claiming the adoption of the Windows Phone OS would reverse the company's decline in the smartphone sector.
However, Mark Copping, a partner at London law firm Hamlins LLP, said Nokia’s shareholders would need to prove fraudulent activity on behalf of the defendants if they’re to be successful in their claim.
He told T3: “It’s unusual for shareholders to sue a company in any jurisdiction just because its share price has gone down.
“I’ll be very surprised if [the shareholders] were successful. What [they] would have to prove is that Nokia was deliberately misleading investors with some other objective in mind.
“They’d need to prove that the defendants somehow profited from Nokia’s shares going down.
“Even if more shareholders jumped on board, it wouldn’t mean the action is well founded,” Copping added.
“They’d still have to prove a degree of deliberate intent to effectively defraud shareholders out of their money.
“It’s very unlikely that Nokia knew their shares were going to go down.”
The Finnish phone maker – previously the global leader of mobile phone shipments - said it’s “reviewing the allegations contained in the complaint and believes that they are without merit”.
The complaint follows a speech by Elop and Nokia’s outgoing chairman and former CEO Jorma Ollila, in which they expressed their disappointment in Nokia’s Q1 fiscal performance.
Taking to the stage at the company’s Annual General Meeting in Espoo, Finland, last week, Elop said: "Like you, we were disappointed with our financial results over the last year and most notably during the first quarter.”
Nokia’s share price - which hit $7.31 when the Nokia Windows Phone partnership was announced in October – crashed to $4.24 following the disappointing news.
However, Copping believes it's not all doom and gloom for Nokia.
“[Nokia] may still come round. Windows Phone may need a lead in time before they’re accepted by consumers.
“The Apple iPhone was an instant success but maybe Windows Phone will take longer to be successful.”