A Berry Bad Move?

We’ve all heard about Blackberry. And we’ve all seen its empire come tumbling down. Now, let’s take a peek at last year before its demise and see what the slipping company has been doing to retain investors…

Extreme pressures in the world of business can sometimes lead to not-so-honest actions. Many well recognized companies have been involved in scandalous cases of fraudulent financial accounting, including Enron and WorldCom(1). This type of fraud usually involves the skewing and embellishing of financial reports to make a company seem more desirable to investors.

Although there are measures taken to try and prevent this (GAAP, external audits), it is still a part of the business world. Recently, a law suit has been filed against Blackberry Ltd. on behalf of thousands of shareholders who purchased BlackBerry stock from Sept. 27, 2012, to Sept. 20, 2013, claiming that executives tried to deceive investors by misrepresenting the state of Blackberry’s operations(2). Blackberry has faced similar lawsuits in the past, such as one alleging the misrepresentation of the financials of the PlayBook after its failed launch in 2011(2).

Did Blackberry intentionally try to deceive its investors, or was its fall just plainly unforeseeable?

References:

1) http://www.coso.org/documents/COSOFRAUDSTUDY2010_001.PDF             2) http://www.theglobeandmail.com/report-on-business/blackberry-hit-with-securities-shareholder-class-action/article14713440/                                                                                                                                                                                                                                                                                        Picture – http://economictimes.indiatimes.com/photo/21638823.cms