US: Sprint investors granted class action status in 2005 Nextel merger case

A federal judge ruled last week that a group of Sprint investors could sue as a class against the company and its former CEO over its 2005 merger with Nextel, according to reports.

US District Judge Eric Melgen ruled March 27 to grant the plaintiffs class action status. The investors argue that they were misled about the financial implications of the transaction, which resulted in one of the globe’s top wireless firms. The companies, however, are accused of misleading their investors by inflating stock prices after the transaction was complete.

According to court documents, the plaintiffs claim Sprint lost thousands of customers between 2006 and 2008 as a result of technical difficulties of the transaction. Despite the financial struggles, the investors claim Sprint continued to send out press releases and regulatory filings that claimed the company was benefitting from the deal.

It wasn’t until Dan Hesse replaced Gary Forsee as Sprint CEO that the financial losses were revealed.

In his ruling, Judge Melgen write that “a single class action is a preferable and superior method to duplicative litigation by individual parties.”

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