Another nail in BlackBerry's coffin? Top investor sues for fraudulent stock claims

Struggling handset-maker BlackBerry was sued recently by one of its top investors, alleging that the company falsely inflated its stock prices through misleading statements about its success and profits.

Marvin Pearlstein, an investor, filed a class action lawsuit in a Manhattan federal court on Friday (4 October), accusing BlackBerry and its CEO Thorsten Heins of duping investors during a conference call on 27 September. The CEO allegedly claimed that BlackBerry "continues to be a financially strong company", and that the company was "squarely on target with the customers that helped build BlackBerry into the leading brand [it is] today".

In the 35-page class action complaint, Pearlstein alleges that he "purchased BlackBerry common stock at an artificially inflated price" due to the comments of Heins and the BlackBerry CFO Brian Bidulka, who is also listed as a defendant. The pair allegedly misrepresented the success of the BlackBerry 10 operating system and compatible devices, released early this year.

Pearlstein asserted that: "In reality, the BlackBerry 10 was not well received by the market and the company was forced to write down a nearly $1 billion [£622 billion] charge related to unsold BlackBerry 10 devices and lay off approximately 4,500 employees, totalling approximately 40 per cent of its total workforce."

This workforce cull was described by Heins as "building a leaner and stronger organisation", and he went on to describe 2013 as "an exciting and important transition year for the company." Pearlstein accuses Heins of "knowingly and/or recklessly" misrepresenting the evidence that "BlackBerry 10 would be a successful device that would revitalise the company" and of making repeated claims that "BlackBerry was 'financially strong.'

BlackBerry Ltd., formerly Research in Motion., has been shaken by increasingly plummeting sales and skyrocketing debts, and is currently slashing operational costs across the board in an attempt to become viable. It's hoping to seal a $4.7 billion (£2.92 billion) buyout deal with its largest shareholder, Fairfax Financial Holdings Ltd.

Some commentators suggest that the company's neglect of the consumer market, and its attempt to make BlackBerry the device most bought by companies for their employees, was the beginning of a sharp decline. With the rise of bring your own device policies, or BYOD, the line between the business and personal device has become ever more blurred. BlackBerry has been slaughtered in the marketplace as a result, despite being the device of choice for US President Barrack Obama.

As a final nail in the coffin, it was revealed as part of the 2013 mass surveillance disclosures leaked by Edward Snowden that the NSA and the UK's GCHQ have almost complete access to the user data on Blackberry devices.

The agencies were able to read SMS, location, emails and notes from users' devices, as well as monitor communications over BlackBerry Messenger (BBM). The security of BlackBerry users' data was seen to be virtually nil, destroying consumer perception of the device.

After peaking at $145 (£90) in 2008, BlackBerry's stock has degraded by a shocking 94 per cent, the recent lawsuit representing yet another potential nail in the coffin for the ailing smartphone manufacturer.