If you recall back in 2013, Detwiler Fenton put out a report claiming that the Z10 at the time had dismal sales and “higher returns than sales rate” which in turn sent the stock tumbling and also had a very negative impact on sales of BlackBerry devices. It later came to light that this information was given to one of Detwiler’s analysts by an executive in the wireless industry. At the time, there was many accusations regarding corruption and illegal activity. Today, the picture became much clearer.
As per US court documents, James Dunham, the former COO of Wireless Zone, which operates over 400 Verizon Wireless franchise outlets who pleaded guilty back in June on wire fraud charges, entered into an agreement with Jeff Johnson of Detwiler Fenton to provide wireless industry information in exchange for $2000 a month.
The Prosecution stated this gave the firm “real time” information regarding the ongoing at the franchise store which was then sent to investors. A clear violation of many rules and regulations in the financial industry. This all came to light after Dunham provided information about an unnamed company’s newly released smartphone which lead to an unfavorable analysis on Johnson’s part.
While the company was not name, according to Reuters who first reported this article, all signs point to BlackBerry.
While not identified in court papers, the manufacturer matches the description of BlackBerry, whose launch of the Z10 smartphone was considered critical to the troubled company.
At the time, BlackBerry’s stock took a 7% dip as the company quickly disputed these claims as inaccurate and misleading. Prosecutors do admit that the information may have been accurate for certain franchise location, it would not have been a representation of the overall market.
The most curious aspect of this whole thing is that Jeff Johnson was never charged and is still employed at Detwiler Fenton. I don’t know about you from what I understand, if you pay someone to perform and illegal act, typically you are just as culpable. I suppose there are different rules in the financial analyst world.