Sweden's Ericsson Sued By 37 Shareholders For $170 Million

Sweden’s Ericsson Sued by 37 Shareholders for $170 Million: Report

Ericsson

Telecommunications company

CEO: Börje Ekholm (16 Jan 2017)
Headquarters: Stockholm, Sweden
Founded: 1876, Stockholm, Sweden
Founder: Lars Magnus Ericsson
Number of employees: 1,04,931 (2023)
Subsidiaries: Cradlepoint; Emodo; iconectiv; inCode Consulting; Red Bee Media; Vonage

Thirty-seven Ericsson shareholders are taking legal action against the Swedish telecoms company, seeking a total of 1.8 billion Swedish crowns (equivalent to approximately $170 million or Rs. 1,405 crores). Their claim is based on the allegation that the company’s CEO, Boerje Ekholm, disclosed information about activities in Iraq, which subsequently caused a significant drop in the company’s stock value. This report was published in the business daily Dagens Industri on Friday (August 4).

Over the past year, Ericsson and its CEO, Boerje Ekholm, have faced heavy criticism for their handling of an internal investigation into the company’s operations in Iraq and their involvement in a scandal related to potential payments to the Islamic State.

The shareholders pursuing the legal action include various investment firms and pension funds, and although they have filed separate lawsuits with a Swedish court, their efforts are being coordinated, according to the report.

In response to the allegations, Ericsson has stated that it completely disputes the claims made against it and will vigorously defend its position. The company emphasizes that this legal challenge is unprecedented in Swedish litigation and runs contrary to fundamental principles of Swedish corporate law, as mentioned in an emailed statement.

As of now, the Swedish court has not issued any response to inquiries made after business hours.

The shareholders are demanding compensation for the sharp decline in Ericsson’s share price since February 16, 2022, after Dagens Industri published an interview with CEO Ekholm, in which he disclosed information from an internal report about the company’s activities in Iraq. The share price has dropped by half, reaching 52.71 crowns on Friday.

In May of this year, Nasdaq Stockholm conducted a review of Ericsson’s public disclosures related to the report. Their findings concluded that the content of the report did not contain information that a reasonable investor would have used to make an informed investment decision.

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Conclusion:

Ericsson, a prominent player in the telecoms industry, finds itself in a legal quagmire as shareholders demand compensation for a sharp drop in its share price following CEO Boerje Ekholm’s disclosure of activities in Iraq. The company staunchly denies all allegations, setting the stage for a protracted legal battle. As the court deliberates on the matter, the outcome will shape the future trajectory of Ericsson and the expectations investors hold for corporate accountability in Sweden’s business landscape.