A class-action lawsuit has been filed against telecoms OEM Ericsson, its CEO Börje Ekholm, and CFO Carl Mellander over the company's recently-admitted dealings in Iraq.
Ericsson shareholder David Nyy has filed a class action on behalf of anyone that acquired Ericsson securities between April 27, 2017 and February 25, 2022, for violations of the Securities Exchange Act of 1934.
The complaint focuses on Ericsson's admission earlier this year that it may have paid ISIS for access through and to land controlled by the terror group in Iraq, leading to contractors being taken hostage.
The company only admitted the potential criminal activity after the International Consortium of Investigative Journalists (ICIJ) contacted Ericsson saying they were about the publish an internal report that revealed its activities.
The ICIJ report also found "possible bribery, money laundering and embezzlement by employees in Angola, Azerbaijan, Bahrain, Brazil, China, Croatia, Libya, Morocco, the United States, and South Africa," none of which were previously disclosed.
Rosen Law Firm, a global investor rights law firm, said that Ericsson had made “materially false and misleading statements regarding the company’s business, operations, and compliance policies.”
Securities litigation law firm Kahn Swick & Foti, LLC and former Attorney General of Louisiana, Charles C. Foti, said that investors had until May 2, 2022 to file lead plaintiff applications in the securities class action lawsuit.
The lawsuit at the United States District Court for the Eastern District of New York also lists the telco OEM's chief executive and chief financial officer as defendants.
Shares in Ericsson have fallen dramatically since the revelation, with some analysts calling the company "uninvestable."
In 2019, Ericsson paid $1 billion to the Department of Justice to settle a long-running investigation into multiple cases of bribery and corruption in China, Indonesia, Vietnam, Djibouti, and Kuwait. It now admits that it breached that agreement, by failing to declare the payments to ISIS terrorists - even though it appears to have been aware of them at the time. It previously breached the agreement in October.