Investors in smartphone manufacturer settle over alleged misstatements, improper accounting

This case relates to Blackberry’s introduction of the Z10 smartphone in 2013. Coherent’s clients alleged that Blackberry made several false and misleading statements to investors relating to the success of the rollout, giving the impression that it was successful even as retailers struggled to sell units and suffered from high rates of return. Investors further alleged that Blackberry relied on improper revenue recognition methodologies to record inflated revenues, even as the rollout faltered. 

Coherent Senior Affiliate Professor Thomas Lys – Professor Emeritus of Accounting Information & Management at the Kellogg School of Management – submitted expert reports and was deposed on his opinions relating to Blackberry’s revenue recognition practices. Among other things, Professor Lys opined that Blackberry use of sell-in revenue recognition was improper under generally accepted accounting principles given various indicators regarding the product launch and the probability of future price concessions.

The dispute settled just as trial was set to begin. Lead counsel for plaintiffs were Kim E. Miller, Lewis S. Kahn, Craig J. Geraci Jr. and J. Ryan Lopatka of Kahn Swick & Foti, LLC, and David Brower of Brower Piven. Professor Lys was supported by a team at Coherent including Laurel Van Allen, Ann Hughes, Dora Altschuler, Seb Peinado, and others.

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