NEW YORK (TheStreet) -- A federal judge in Kansas has ruled that a lawsuit, which alleges Sprint (S) and its former CEO Gary Forsee misled investors regarding the influence of its acquisition of Nextel in 2005, will now proceed as a class action suit. according to Reuters.
U.S. District Judge Eric Melgren of Kansas City issued the decision on March 27. Plaintiffs claim the company and Forsee inflated Sprint stock and bond prices between Oct. 2006 and Feb. 2008 by covering up issues after the Nextel acquisition. The suit claims Sprint promoted in press releases, conference calls and regulatory filings that it received billions of dollars in benefits from the acquisition, but in fact numerous differences hindered wireless network integration and caused the loss of thousands of customers.
In Jan. 2008, one month after Dan Hesse was tapped to replace Forsee as CEO, Sprint revealed it had lost 683,000 customers in three months. The stock price promptly plummeted 25% in one single day, according to the plaintiffs, and subsequent disclosures further hurt the stock price.
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Sprint dipped 1.88% to $9.39, down 18 cents from its previous close of $9.57, at the close of trading on Wednesday. The stock had a range of $9.28 to $9.55 for the day and holds a one-year range of $5.61 to $11.47. Nearly 15.2 million shares changed hands Wednesday, less than the average volume of 18,617,100.