Nokia hit with class action lawsuit; fraud claims 'without merit,' it says

Did Nokia, CEO Stephen Elop and CFO Timo Ihamuotila engage in a scheme to artificially inflate its stock price and defraud investors? A new lawsuit alleges so.

If a company believes it will succeed on the shoulders of a new product, and then it does worse than expected, did it defraud investors?

Robbins Geller Rudman & Dowd thinks so. The law firm filed a class action suit against Finnish mobile giant Nokia yesterday claiming that the company made false and/or misleading statements to investors after it indicated that it believed the switch to the Windows Phone operating system "would reverse Nokia's trends worldwide and dramatically improve its share of the U.S. market," according to the complaint (.pdf).

The rub? Nokia is alleged to have known that such a turnaround wouldn't happen; the new Lumia 900 LTE model was glitchy and poorly accepted and its migration "not going as well as represented," according to the complaint.

Meanwhile, its stock price kept going up -- peaking at more than $7.31 per share -- until first quarter results were announced, when it dropped precipitously from $5.03 per share to $4.24 per share. The suit claims this was a "scheme to deceive the market" because it artificially inflated the company's stock price.

"Nokia is reviewing the allegations contained in the complaint and believes that they are without merit," the company responded today. "Nokia will defend itself against the complaint."

The suit names Robert Chmielinski as plaintiff and Nokia Corp., CEO Stephen Elop and CFO Timo Ihamuotila as defendants. It was filed in the U.S. District Court for the Southern District of New York.

Photo: Stephen Elop at Nokia World 2011. (Nokia)