According to a press release dated April 1, 2006, on March 31, 2006, Judge Kenneth M. Karas of the United States District Court for the Southern District of New York granted Nokia Corporation's Motion to Dismiss all claims made in the class action securities litigation filed against Nokia Corporation and several of its executives in April 2004. Judge Karas dismissed with prejudice each and every claim against Nokia Corporation and the individual defendants. In a 77-page opinion, Judge Karas carefully reviewed each of the plaintiffs' allegations and found none of them to be substantiated by fact. By dismissing the claims with prejudice, Judge Karas has denied the plaintiffs the opportunity to raise them again. In addition, he has denied the plaintiffs the right to file an amended complaint, finding that continued pursuit of the case would be futile.
As previously reported by the Company’s FORM 20-F for the fiscal year ended December 31, 2005, on April 6, 2004, Irving Greenfeld filed suit against Nokia and certain individuals in the United States District Court for the Southern District of New York on behalf of all purchasers of Nokia's stock between January 8, 2004 and April 6, 2004. Subsequently, six individuals, Marc Abrams, Emery Chu, Zoe Myerson, Thomas Pflugbeil, Michael Devine and Donald L. Siefert, filed related actions, each alleging that Nokia's January 8, 2004 earnings guidance was materially misleading, as allegedly revealed in Nokia's April 6, 2004 press release. In addition, the complaints allege that Nokia's senior executives possessed material adverse information about the success of Nokia's reorganization and fraudulently failed to disclose this information. In September 2004, the court appointed Generic Trading, Martin Bergljung and Gerald Hoberman as lead plaintiffs and Milberg Weiss and Entwistle & Capucci as lead counsel. On January 7, 2005, lead plaintiffs filed a consolidated class action complaint (the "Consolidated Complaint"), on behalf of all purchasers "worldwide" of Nokia securities during the class period. The Consolidated Complaint expanded the original class period (January 8, 2004 through April 6, 2004) to October 16, 2003 through April 15, 2004. The Consolidated Complaint also added two new defendants in addition to the four individual defendants named in the initial complaint. The Consolidated Complaint alleges principally that Nokia's positive statements about its product portfolio and the projections based thereon were false and misleading because Nokia knew that there were substantial weaknesses in the product portfolio. The Consolidated Complaint also alleges that Nokia employed accounting and inventory techniques that were allegedly used to improperly manipulate sales figures.
The original complaint alleges that defendants violated sections 10(b) and 20(a) of the securities exchange act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between January 8, 2004 and April 6, 2004. The complaint alleges that during the Class Period, the Company represented that sales growth in the first-quarter of 2004 would be between 3% and 7%, that the Company expected market growth to continue, and that the Company had a strong position in the market for mobile phones.
The complaint further alleges that on April 6, 2004, Nokia announced in a press release that first-quarter 2004 net sales would not increase by 3-7%, as previously stated but would decrease by 2%, that the Company had been unable to respond to changing trends in demand for mobile phones and that it was losing market share to its competitors. On this news, Nokia ADRs, which had closed at $21.15 on April 5, 2004, fell 16% to $17.73% in midday trading on volume in excess of 71 million shares.