IBM Shareholder Drops Suit Over Cooperation With NSA

An International Business Machines Corp. (IBM) shareholder withdrew a lawsuit claiming the company’s cooperation with a National Security Agency eavesdropping program caused a drop in its China sales.

The Louisiana Sheriffs’ Pension and Relief Fund dropped the securities fraud suit after investigating its claims against IBM, lawyers for the fund said in a letter to U.S. District Judge Denise Cote made public today.

The decision was “based on new information that wasn’t available” earlier, John C. Browne, a lawyer for the fund, said in a telephone interview today.

IBM, which had criticized the suit as “pushing a wild conspiracy theory,” said the fund did the right thing.

“At the time this suit was filed, we said the complaint proceeded to make numerous specious and false accusations, and IBM called upon the law firm that filed this action to do the right thing and dismiss it,” Doug Shelton, an IBM spokesman, said in an e-mailed statement today.

IBM, the largest computer-services provider, reported a 22 percent drop in sales in China on Oct. 16 compared with the previous quarter as a result of disclosures by Edward Snowden that the company was cooperating with the NSA, the Louisiana fund said in the complaint.

Snowden, now living in Russia, had revealed details of an NSA surveillance program showing that technology companies were providing data at the request of government agencies. IBM in March said it hadn’t disclosed client data to the U.S. government.

The Louisiana fund said it pays retirement, death and disability benefits to more than 20,000 active and retired employees of sheriffs’ offices across the state.

The case is Louisiana Sheriffs’ Pension & Relief Fund v. International Business Machines Corp., 13-cv-08818, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Joe Schneider, David Glovin

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