Once again, there is a fresh example of people using lawsuits to avoid taking responsibility for their own actions. The same day last week that Nokia Corp. issued a warning that its first-quarter revenues would not hit its original expectations, the law firm of Milberg Weiss Bershad Hynes & Lerach filed a complaint alleging violations of federal securities laws by Nokia and certain executives. The company, which touts itself as “the world’s leading class-action law firm,” said the violations occurred between Jan. 8 and April 6, 2004.
Milberg Weiss is the same firm representing Indiana Electrical Workers Pension Trust Fund, an institutional investor in Nortel Networks Ltd. Milberg Weiss filed a complaint March 17 against Nortel also alleging violations of federal securities laws. Milberg Weiss’ Web site has a list of current and settled cases and allows entities to apply to be lead plaintiffs.
Don’t get me wrong. The lawsuits that popped up following the corporate scandals targeting Enron, WorldCom and all the other companies with executives who obviously and knowingly lied to shareholders about their financial situations were completely justified.
But Nokia said last week its net sales for the first quarter will be around $7.9 billion, a 2-percent decline compared with the same quarter a year ago. A 2-percent expected revenue decline hardly compares to the billions of overstated revenue dollars by WorldCom. And by issuing a warning, isn’t Nokia keeping investors updated on its progress rather than hiding details? Since early January, Nokia’s stock price has been way up from 2003 levels.
Nokia’s problems were blamed on its lack of mid-range phones in Europe along with headier competition from Sony Ericsson Mobile Communications, Motorola Inc. and Samsung Electronics Co. Ltd. Those business issues hardly compare to the out-and-out fraud committed by executives of Enron and WorldCom.
That’s not to say wireless firms haven’t made their share of financial mistakes. Lucent Technologies Inc. is familiar with class actions, and the U.S. vendor canned four executives in China last week for possible violations of U.S. law against overseas bribery. Nortel has obviously made some accounting errors and is now paying the price with an SEC investigation and its own pack of class-action suits. And then there’s the overspending and high debt loads by numerous wireless carriers.
But the last time I checked, investing in stocks was considered risky. If you’re not comfortable with a company’s stock price decreasing, don’t buy stocks. Some recent lawsuits remind me of the episode of “Seinfeld” when Kramer tried to sue a coffee house because he burned himself with “too-hot” coffee. These lawsuits hardly seem like the best use of our judicial system.
