BlackBerry seeks regulator probe into reports of “false“ rejection rates of Z10

Canadian smartphone maker BlackBerry has said it would ask securities regulators to probe into a report that its new Z10 phones have high rejection rates, a false data that was deliberately released in order to manipulate its stock price.

BlackBerry Z10Boston-based financial-services firm Detwiler Fenton & Co had yesterday said that significant number of customers were returning Blackberry's latest smart phone – the Z10, because they found the interface unintuitive.

''In several cases, returns are now exceeding sales, a phenomenon we have never seen before,'' Detwiler Fenton said.

The report sent the Ontario-based company's share price plunging by 7.8 per cent, its worst one-day drop in almost two months.

BlackBerry, which is banking on the Z10 to turn the company around, said that sales are meeting expectations and return rates are in line with the rest of the industry.

It asked both the US Securities and Exchange Commission and the Ontario Securities Commission to review the Detwiler report, as it felt that it was either ''a gross misreading of the data or a willful manipulation.''

''We call upon the appropriate authorities in Canada and the United States to conduct an immediate investigation,'' chief legal officer Steve Zipperstein said in a statement.

''Everyone is entitled to their opinion about the merits of the many competing products in the smart phone industry, but when false statements of material fact are deliberately purveyed for the purpose of influencing the markets a red line has been crossed,'' he added.

Detwiler Fenton had named electronics distributor Brightstar who had in advance bought 1 million BB10 devices on behalf of Verizon because the US carrier was trying to hedge its risk on a product it was not sure of doing well.

Verizon Wireless, the largest US carrier, said that after the first 14 days of launch, quality performance of the Z10 has been in line with similar devices.

Blackberry said in a press release that itself and Verizon Wireless refuted claims from Detwiler Fenton that BlackBerry Z10 devices were being returned in unusually high numbers.

It added that Detwiler Fenton refused to make either its report to investors or its methodology available to BlackBerry, even after the company said the firm's findings were ''absolutely false.''

Detwiler Fenton said in a statement yesterday that it stood by its report. ''We are confident in our research methodology and we welcome any regulatory inquiry,'' Anne Buckley, the firm's general counsel and chief compliance officer, said in the statement.

She also went on to say that neither the analyst who wrote the report nor any officer or director of Detwiler Fenton has any financial interest in BlackBerry and Detwiler Fenton is not the only research provider publishing similar reports regarding customer reactions, sales and returns of the BlackBerry Z10.

The Z10, working on the company's new BlackBerry 10 operating system, went on sale in the US last month after its launch was delayed by nearly two years.

Shares of BlackBerry closed yesterday at $13.64 on the Nasdaq Stock Exchange.