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Ericsson beats US shareholder lawsuit over graft disclosures
Global Banking & Finance Review®
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(Reuters) – Swedish telecoms company Ericsson beat a lawsuit by U.S. shareholders on Wednesday, when a federal judge ruled it did not mislead investors about its compliance with U.S. anti-bribery laws.
(Reuters) – Swedish telecoms company Ericsson beat a lawsuit by U.S. shareholders on Wednesday, when a federal judge ruled it did not mislead investors about its compliance with U.S. anti-bribery laws.
The lawsuit filed by a Boston-based pension fund claimed that Ericsson had overstated the extent to which it had eliminated the use of bribes after it settled corruption allegations made by the U.S. Department of Justice (DOJ).
U.S. District Judge William Kuntz in Brooklyn, New York, wrote that Ericsson had issued “ubiquitous warnings” to investors raising “the possibility of future compliance failures” after the agreement.
Commenting on the court decision, Ericsson said in a statement on Thursday, “The motion to dismiss decision is subject to appeal from the plaintiff. Ericsson will continue to vigorously defend this matter if appealed.”
The lawsuit was filed in March 2022, after the company’s stock dropped sharply following allegations by the DOJ that Ericsson was in breach of a 2019 deferred prosecution agreement (DPA) for failing to fully disclose details of its operations in Iraq. The lawsuit sought damages for investors who bought Ericsson American Depositary Shares between April 27, 2017 and March 1, 2022.
Ericsson agreed to pay $206 million and plead guilty in March for violating the DPA agreement.
Under the conditions of the 2019 DPA, Ericsson paid more than $1 billion to resolve a series of corruption probes, involving bribery allegations in China, Vietnam and Djibouti, and agreed to cooperate with the department for ongoing investigations.
The case is In re: Telefonaktiebolaget Ericsson Securities , No. 22-1167, U.S. District Court, Eastern District of New York.
(Reporting by Jody Godoy; additional reporting by Anna Ringstrom in Stockholm, editing by Diane Craft and Sohini Goswami)
Compliance refers to the process of adhering to laws, regulations, and guidelines set by governing bodies to ensure that a company operates within legal frameworks.
A financial crisis is a situation where the value of financial institutions or assets drops rapidly, leading to a loss of confidence and potential economic downturn.
Corporate governance involves the systems, principles, and processes by which companies are directed and controlled, ensuring accountability and transparency in business operations.
Anti-money laundering (AML) refers to laws and regulations aimed at preventing the process of making illegally obtained money appear legitimate.
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