10/05/2013 01:23 EDT | Updated 01/23/2014 06:58 EST

Lawsuit Against BlackBerry Alleges Execs Misled Investors On Company's State

Thorsten Heins, president and chief executive officer of Research In Motion Ltd. (RIM), pauses while speaking at the company's annual shareholders meeting in Waterloo, Ontario, Canada, on Tuesday, July 10, 2012. Research In Motion Ltd. aims to release the first of its new BlackBerry 10 smartphones globally in January, betting that the device will help it regain market share lost to rivals led by Apple Inc. and Google Inc. Photographer: Brent Lewin/Bloomberg via Getty Images
BlackBerry and some key executives are facing allegations they misled investors on the state of the company’s future, and how its BlackBerry 10 would fare against competitors.

A class action lawsuit filed by one BlackBerry shareholder claims leaders of the Waterloo, Ont.-based smartphone maker failed to tell investors that “the company was not on the road to recovery and reemerging as a lead player in the wireless communications industry.”

“In reality, the BlackBerry 10 was not well-received by the market,” said the lawsuit, filed in a Manhattan court by shareholder Marvin Pearlstein on Friday.

The class action suit seeks to represent “thousands” of shareholders who purchased BlackBerry stock from Sept. 27, 2012 to Sept. 20 of this year, a period in which it alleges executives misrepresented the state of BlackBerry’s operations.

Also named as defendants in the lawsuit are chief executive Thorsten Heins and chief financial officer Brian Bidulka.

None of the allegations have been proven in court, and a representative for BlackBerry declined to comment, saying the company is "reviewing the matter."

Last month, BlackBerry disclosed that it would book nearly a billion dollars in losses related primarily to the writedown of unsold BlackBerry Z10 touchscreen smartphones, and also lay off about 40 per cent of its employees in an effort to reduce costs.

The court filings outline numerous news releases issued by BlackBerry , as well as cite quarterly conference calls where it alleges executives “deceive the investing public.”

The lawsuit claims that the recent tumble in BlackBerry stock was a direct fallout from the executive’s misrepresentation of BlackBerry’s financial state.

“The timing and magnitude of BlackBerry’s stock price decline negates any inference that the loss suffered by the plaintiff and the other class members was caused by changed market conditions, macroeconoimc or industry factors,” the lawsuit alleges.

Since Sept. 20, when the company first disclosed the massive loss and layoffs, BlackBerry’s share price has tumbled 25 per cent on the NASDAQ in New York.

BlackBerry has faced numerous other class action lawsuits in the past.

In 2011, a U.S. judge threw out a suit claiming executives of the company, then known as Research In Motion, misled investors on its financial condition and the prospects of its devices, which included the failed launch of its PlayBook tablet. The case is being appealed by the plaintiffs.

Another class action lawsuit was filed the same year by Montreal-based law firm Consumer Law Group Inc. seeking refunds for the downtime caused by a massive BlackBerry service outage.

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