Labaton Sucharow, a nationally ranked and award-winning shareholder rights law firm, announces that it is investigating potential violations of the federal securities laws by Ericsson ("Ericsson" or "the Company") (NASDAQ:ERIC).
On February 15, 2022, Ericsson released a statement revealing that unusual expense claims in Iraq, dating back to 2018, had triggered a review that uncovered concerns about compliance with the company's Code of Business Ethics.
Ericsson's statement further disclosed that a subsequent investigation of the conduct of Ericsson employees, vendors and suppliers in Iraq during the period 2011-2019, found serious breaches of the Code of Business Ethics and other compliance rules, and identified evidence of corruption-related misconduct, including, making a monetary donation without a clear beneficiary; paying a supplier for work without a defined scope and documentation; using suppliers to make cash payments; funding inappropriate travel and expenses; and improper use of sales agents and consultants.
In addition, the investigation uncovered violations of Ericsson's internal financial controls; conflicts of interest; non-compliance with tax laws; and obstruction of the investigation. It also identified payments to intermediaries and the use of alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist organizations, including ISIS, controlled some transport routes. Payment schemes and cash transactions that potentially created the risk of money laundering were also identified.
On February 16, 2022, it was reported that Ericsson Chief Executive Borje Elkholm advised the Danish newspaper Dagens Industri that payments dating back to 2018 may have been made to purchase transportation routes "through areas that have been controlled by terrorist organizations, including ISIS."
In reaction to these disclosures, the price of ERIC stock has dropped nearly 15% as of 10:45 AM Eastern on February 16, 2022.
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David J. Schwartz