IBM hid China's reaction to NSA spying 'cos it cost us BILLIONS, rages angry shareholder
Lawsuit claims US snooping led to 22pc Chinese sales slump
An IBM shareholder is suing Big Blue, accusing it of hiding the fact that its ties to the NSA spying scandal cost it business in China – and wiped billions off its market value.
The Louisiana Sheriffs' Pensions and Relief Fund has filed the suit in New York, claiming that Big Blue "misrepresented and concealed" that its association with the NSA caused Chinese companies and the Chinese government to abruptly stop doing business with it, according to the shareholder's lawyers.
"When the company ultimately revealed the truth regarding the collapse of its business in China, the price of IBM stock fell almost $12 per share," the legal team said in a statement, while inviting other shareholders to join the suit.
IBM lobbied the government in favour of a bill that would allow it to share customers' data with the NSA, including information from its clients in China, the complaint said. When NSA whistleblower Edward Snowden leaked the documents uncovering the Prism surveillance programme and IBM's connections to it, Chinese organisations started severing ties with the firm, but it did not disclose this to investors, the court filing went on to allege.
In October, Big Blue reported third quarter earnings that missed estimates by a billion dollars, including a fall in Chinese sales of 22 per cent and a 40 per cent drop in hardware sales, which the suit attributes to the NSA revelations.
In the following days, IBM shares dropped 7.4 per cent to $172.86, wiping $15bn from its market capitalisation. Stocks closed yesterday at $173.37.
The pension fund wants to kick off a class action suit that represents any investors who bought IBM stock between June 25 and October 16, the time period during which it alleges that Big Blue knew something was up in China but said nothing.
IBM told The Register in an emailed statement that the suit was "ludicrous and irresponsible" and said it would be vigorously defending itself in court." ®