Yesterday, we reported how BlackBerry wanted to settle a long-running lawsuit that claimed BlackBerry committed fraud by pumping up the profitability of its defunct BlackBerry 10 line of phones.
Today, the company announced that it has reached an agreement in principle to settle the consolidated securities class action lawsuit.
The agreement in principle contemplates an aggregate cash payment by the Company of $165 million to settle the claims brought on behalf of all persons who purchased or otherwise acquired BlackBerry shares on the NASDAQ between March 28, 2013 and September 20, 2013.Â
The parties have agreed to negotiate in good faith to execute a definitive stipulation of settlement and related documents to be filed with the court. BlackBerry anticipates that the stipulation of settlement will provide a full release of all claims against all defendants, including the Company and its officers, and will expressly deny any liability, wrongdoing or responsibility by any of the defendants.Â
BlackBerry anticipates that, upon final approval of the settlement, the litigation will be dismissed with prejudice. Approval by the court, notice to the putative class, and the satisfaction of customary conditions to effectiveness may take several months.Â
BlackBerry stated today:
While BlackBerry believes that the allegations in the case were without merit, it also believes that eliminating the distraction, expense and risk of continued litigation is in the best interests of the Company and its shareholders.
As previously disclosed, given the uncertainties of litigation, BlackBerry had not been in a position to assess the likelihood of any potential loss or adverse effect on its financial condition or to reasonably estimate the amount of potential loss in connection with the class action.Â
As a result of the entry into the agreement in principle, BlackBerry expects that the above-referenced $165 million will be incorporated into its results of operations and financial condition for the fiscal quarter ending May 31, 2022. The Company does not expect to recover any portion of this amount from insurance proceeds.
Any settlement will require the judge’s approval.
Back in March of 2015, BlackBerry won the dismissal of a U.S. lawsuit accusing it of fraudulently inflating its stock price by painting a misleadingly upbeat picture of the prospects for its BlackBerry 10 smartphones.
However, after the plaintiffs submitted an amended lawsuit in 2018, over statements related to BlackBerry 10, a US Judge rejected BlackBerry’s request to dismiss the amended lawsuit.
Just three months ago, in January of this year, U.S. District Judge Colleen McMahon threw out BlackBerry’s latest bid to dismiss the lawsuit and said the class-action case could go to trial this fall.
Low sales of BlackBerry 10 smartphones led to a projected $930 million writedown for unsold inventory on Sept. 20, 2013, causing BlackBerry shares to lose about one-sixth of their value that day.
In the original lawsuit, filed in October 2013, shareholders accused BlackBerry of overstating how well customers were “embracing” BlackBerry 10, and manipulating its books by recording revenue too fast and waiting too long to write off unsold inventory.
