Lawsuit Accuses IBM of Hiding Info About China Risks


A shareholder has sued IBM Corp, claiming that the company concealed how its connection to what became a huge U.S. spy scandal damaged business in China and reduced its market value more than $12 billion. According to a complaint filed in the U.S. District Court of Manhattan, IBM lobbied congress to pass a law allowing them to share the personal information of customers in China and elsewhere with the U.S. National Security Agency in an effort to protect its intellectual property rights.

The plaintiff in the complaint, Louisiana Sheriffs’ Pension & Relief Fund, said this posed a threat to IBM hardware sales in China, particularly due to a program known as “Prism” that allowed the NSA spy on the country through technology companies such as IBM. The Baton Rouge pension fund said that Edward Snowden revealing Prism caused Chinese businesses and China’s government to sever ties with IBM.

It blames these events for the October 16th revelation of disappointing third-quarter sales results in China. The lawsuit names IBM, Chief Executive Virginia Rometty and Chief Financial Officer Mark Loughridge as defendants, and claims they should be held liable for the company’s failure to quickly reveal the risks of its lobbying and NSA connection.

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