Back-end digital music provider Loudeye is facing some legal issues as it is taken over by technology firm Nokia. Although the company's investors have, as expected, given the go ahead to Nokia's takeover, a number of lawsuits have been issued against the digital music company alleging the firm artificially inflated its value between the period of May 2003 and September 2005, affecting share price and stock value.
One of the lawsuits, issued by New Orleans-based Kahn Gauthier Swick, LLC, accuses Loudeye management during that period of "severe financial and operational control deficiencies", a situation which led, they say, to subsequent “stock declines".
Other lawsuits make similar allegations. US firm Scott+Scott says the "defendants made false and misleading statements and material omissions" about core performance, while the Law Offices Of Howard G. Smith say "material misrepresentations to the market" were made during the period.
Loudeye are yet to comment. However, the lawsuits are unlikely to stop Nokia's $60 million takeover of firm, which has now cleared all the regulatory and shareholder hurdles. As previously reported, the purchase is part of Nokia's attempts to gain advantage in the digital and especially mobile music markets.