Ericsson says U.S. court rejected shareholder suit

The U.S. District Court for the Eastern District of New York dismissed a case that Ericsson shareholders brought against the company in connection with business dealings in Iraq that caused its stock to drop significantly.

The court rejected in full the plaintiff’s claims that Ericsson misled investors, concluding that Ericsson did not violate any disclosure obligation, according to a press release.

Ericsson isn’t completely out of the woods yet. The motion is subject to appeal. Ericsson said it will “continue to vigorously defend this matter” if appealed.

The lawsuit was filed in March 2022 after Ericsson’s stock dropped sharply following allegations by the U.S. Department of Justice (DoJ) that Ericsson was in breach of a 2019 deferred prosecution agreement (DPA) for failure to disclose details of its operations on Iraq, according to Reuters. The lawsuit sought damages for investors who bought Ericsson shares between April 27, 2017, and March 1, 2022.

In March of this year, Ericsson agreed to plead guilty and pay a criminal penalty of more than $206 million after breaching the 2019 DPA. U.S. officials said Ericsson engaged in a long-running scheme to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes, falsifying books and records and failing to implement reasonable internal accounting controls in multiple countries.

Separately, Ericsson announced this week that Nasdaq Stockholm has formally closed its review into Ericsson’s public disclosure concerning the 2019 Iraq report.

In closing the case, Nasdaq stated that it “cannot come to the conclusion that the content of the report was such that a reasonable investor would have used such information as part of his/her investment decision.”

At Ericsson’s annual general meeting in March, Ericsson shareholders voted against discharging CEO Börje Ekholm and most of the board members of liability for the company’s actions during 2022. That gave investors the right to sue board members in the future under Swedish law.