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Research In Motion Under Investigation for Potential Federal Securities Law Violations

By Adam Zeis on 23 May 2011 02:51 pm EDT
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RIM Headquarters 

RIM has announced today that law firm Holzer Holzer & Fistel, LLC has launched an investigation for possible federal securities law violations. The firm claims that RIM had made false and misleading statements regarding some aspects of their business. The main focus of the investigation is if RIM knew but failed to disclose that they were having issues that were negatively impacting their margins and overall business. The statements were said to be made between December 16, 2010 and April 28, 2011. There are no other details for now but we'll see how this all pans out in the coming days. Only fair to note however, Holzer Holzer & Fistel, LLC pulled the same actions against Palm before HP acquired them.

Source: Reuters

49 comments

eve6er69

wow this sounds serious

Bla1ze

Not really, the same fools did the same thing to Palm.. waste of time.

ghostzapper

Holzer Holzer & Fistel also announced in Sep-2010 that it was investigating Green Mountain Coffee Roasters.

This must be their "line of business."

jimcmf2

Yes, just like lawyers, they need to make money.
These guys never get anywhere with this sort of stuff. It's just a waste of time and money. Remember ... we use words like; 'believe' 'think' 'estimate' 'should' 'could' 'may have' 'might' yadda yadda yadda. You get the drill.

newcollector

Wham! That's the sound of my RIMM stock hitting rock bottom. :-) On the other hand this law firm has an ad out asking for people who purchased RIMM stock during the time periods mentioned to contact them. Sounds like an investor got ticked and now is looking to sue. We have a class action type lawsuit in the works. I'm not selling my Rimm stock on this one.

Even though the stock market is down over a 100 as I type, RIMM is one of the few tech stocks up.

Kiddo2050

ya another pain in the ass for RIM, but just foolishness.

jimcmf2

"Buy low, sell high".
This happened with BCE when the teachers bailed out.
Check out the stock price lately: Symbol : BCE

It's just more RIMM bashing. Poor Jim and Mike. They don't deserve how the media is treating them after they do such a good job. I have a BB and a PlayBook, and both are AWESOME.
I see everyone with BlackBerrys. They are very classy and cool.

mattvait

aannn the stock tumbles now....

drethos

Everybody sew everybody, what a world we live in were false allegations can waste millions of dollars. All because someone with their hand out didn't get there's.

jimcmf2

Just a quick note. It's SUE

robertdusa

Uh-oh! Now @drethos can sue you for public defamation of character due to use of CAPS in your reply to their reply in a public reply forum.

Textbook case.

Scarpia

Fire sale! I'm gonna get me some shares of "RIMM" stock! Woo Hoo!

Laura Knotek

Will RIM soon have a takeover buyer?

aris20

why ppl say "RIMM" ?

leafs123

That's their listing code on the stock market.

jimcmf2

It's the US stock ticker symbol : RIMM

tsecor

Another huge bump in the rim road....what next

branflakes

Based on what scant information we have, sounds dubious to me. I'd really want to know what "statements" they think are so misleading.

jimcmf2

It's not statements that they made. It was statements that they didn't make.

kyopo

The title is totally misleading. An investigation suggests that it is the government investigating a securities law violation. This is just a securities litigation firm trying to find something to sue about. This isn't an "investigation." This is just the same type of class action securities litigation that happens when stock price drops. The headline is utter bullshit and while I realize that none of the editors is a lawyer, they should know better than to just throw up a headline like this. The press release was clearly released by the law firm.

jimcmf2

I wish RIM sue them back for tarnishing their good name. A cool Billion should do the trick.

FYI - It's RIM bashing season. They don't deserve it. Tell them Kevin !

_StephenBB81

Adam Please correct your title, RIM isn't UNDER investigation, RIM is being investigated by a Law firm, that is very different

Use the same or a similar title to that of Reuters not something like BGR

sf49ers

please change the title as it is misleading, RIM is not under investigation but this is just a litigation filed a law firm.

Jan_the_Bicycle_Man

I smell a rotten "Apple" behind this action.

herrbremerhaven

This is fairly common anytime a major stock goes down more than the overall market declines. If the SEC were behind the investigation, then you could put more weight to this. That a law firm is behind it is more of shareholder activism, meaning a few larger shareholders may have prompted this. As a RIMM shareholder, I got a message inviting me to participate, though the bottom line is that this law firm is trying to leach money out of this action. Most of these types of actions fail to go anywhere, though some result in a settlement in order to quash the negative publicity.

Disclosure: I hold shares of Research in Motion (RIMM) though this comment should not be considered a recommendation to buy, nor a recommendation to sell, any shares.

jimcmf2

lol ... that's funny.

mssca

Imagine a world without lawyers? More than 90% of the law firms are good for the devil... IMHO

schmittdog

Hmmm.... Something seems really fishy after the Whole Foxconn Thing with Apple there. Sounds like since Apple has a stop gap dealing with their products, there seems to be one on RIM now? Bring it on Apple! You don't have a prayer or a reliable OS, that can do multi-tasking or Flash!

br14

At a guess the lawsuit is based on the fact RIM came out a few weeks after providing quarterly results and reasonably positive guidance, and adjusted that guidance downward.

While the reason for the sudden change isn't public (so far as I'm aware), it can only be for one of three reasons. Either 1, RIM had a sudden drop in revenue, 2, RIM had a sudden increase in expenses, or 3 RIM deliberately misled investors.

Assuming they're not daft enough to do 3 (sadly not impossible hence the lawsuit), it's either a sudden increase in costs, or a sudden decrease in revenues.

However badly RIM is administered they're not likely to be so bad they don't know what stuff costs, so it has to be 1. Speculation but it sounds as though someone canceled a massive order.

To impact guidance as negatively it has to be a volume buyer of RIM product.

So either this law firm is sure RIM misled investors or they're aware of a material change to RIM order board that the company has not communicated to investors.

A wild guess but maybe AT&T were totally pissed at the ability to tether Playbooks for free and so canceled orders.

For whatever reason RIM appears to have offended all the major carriers in one action. None of the US carriers appear to be promoting RIM products as much they have done in the past.

RIM needs to get new phones to market and quick.

dmann96

I was thinking more like Verizon canceling the Storm3.

axe50

thats exactly what I was thinking. No other major handset that was scrapped...unless this is related to the marvel-blackpad fiasco...

jimcmf2

Neither. RIM said that it did a recalculation of what its distributors had in inventory, and found it to be a bit higher then first thought. Thus, they wont need to re stock as much. Thus, a slight decline in what it thought that it was going to sell.

All I care about is that they beat their previous years profit. It's all about PROFIT ! A fat juicy $7.00/share will do just fine.

Sony lost 3.5 BILLION last quarter. Why doesn't the media bash them? Go ahead media. Tell everybody that Sony has been washed out to sea. They are dead in the water. Barried at Sea. Washed up. Going out like Palm. A had been.

I can give you more if you want?

What's going to happen when Steve Jobs passes away?
The media is going to be all over this one.
The media is EVIL !!!!

aa25007

I smell the evil "little green monster" and the company owned by "Jobs" are after something. Getting rid of RIM so they can rule the mobile market for good. Not a three way war but just two mobile OS war.

jimcmf2

Jobs is VERY VERY VERY VERY sick. So leave him out of this.

kevinnugent

Dude, seriously? I doubt Google or Apple lose any sleep over what RIM does.

This is shareholder instigated. The people that OWN RIM. You want to blame someone, look at their major shareholders.

Defero

Ha same company investigated green mountain coffee roasters. The stock took a huge hit and I bought at 33.33. its now at 79.xx. Remember how litigious the usa is. Its a bunch of bs.

kailashr

I guess RIMM bus is heading down the "PALM" Dr. Ignoring the No Outlet, Deadend Ahead sign...

QBert

If a similar investigation preceded the Palm acquisition by HP, maybe the same will play out here? Kevin and the gang speculated in the last podcast that if anyone were to buy out RIM, Microsoft would make the most sense, especially with recent news regarding Bing and BB. Maybe MS is trying to drive down RIMM stock before a buy out? I have absolutely no basis for this comment, just putting pieces together. Just having fun speculating...

PacFu

there is a reason microsoft has their own law firm inside the company. Bigger you are, you become a target for EVERY ambulance chaser, and in this regard, no real concern but throwing S*** on the wall to see if it sticks...

br14

"Neither. RIM said that it did a recalculation of what its distributors had in inventory, and found it to be a bit higher then first thought. Thus, they wont need to re stock as much. Thus, a slight decline in what it thought that it was going to sell."

That qualifies as a reduction in revenue.

If the recalculation story is true frankly that's an even worse reflection on RIM - since despite the fact everyone that ever activated a BlackBerry is logged by RIM - they don't seem to be able to make the relatively simple cross reference to the devices actually shipped to the carrier - and therefore the likely inventory at each carrier.

I don't buy the "recalculation" story, and neither it appears does this group of lawyers. Surely if you're going to "recalculate" inventory, you do it prior to announcing to the world how well you're doing.

Take a look at US carrier store websites. You have to look pretty hard to find BlackBerry devices among the host of Android phones.

I'd speculate that somehow RIM have messed up their carrier relationships. And given no one believes anything Jim Balsillie says anymore. I don't think having him run marketing is a terribly good idea.

booraa

The law firm Holzer Holzer & Fistel, LLC is currently under investigation for possible deflate-and-buy style securities fraud, along with a possible premeditated stragegy of libeling other corporate interests. Also under investigation is possible violations that could lead to disbarment of principal partners in the firm and dissolution of the company as a whole. When booraa (who is an expert at this kind of stuff) is finished with an in-depth investigation, he'll probably be able to reveal that a wholesale policy of general douchebaggery was in place at the company.

Jamie_Reckless

sounds like a bunch of "spread the wealth" liberals, upset over someone making too much of a profit. o,r profit greedy right wingers, upset for people making a profit other than themselves. maybe RIM should investigate them for fraud. seems to me like they are trying to "deflate" a company, to acquire them @ minimal cost.

or i could be wrong & its a sophisticated plan of some very wealthy, but unorganized in thought..haha!

both types are unacceptable & wreckless

Gamesdmc3

I want to take a pic on top of the blue RiM