IBM Being Sued for Allegedly Inflating AI Cloud Revenues, Misleading Investors

IBM AI Lawsuit Sued

The Multinational technology company IBM are being sued after investors claim they were misled. The company reportedly used mainframe revenue to artificially prop up up their AI cloud revenues and other new services.  

The class-action securities fraud lawsuit, filed in the U.S. District Court for the Southern District of New York has been filed against IBM and 13 employees, including CEO Arvind Krishna.

It is alleged the company and staff duped the investors into believing it’s cloud AI services had more demand than it truly had. 

IBM Sued by Investors

The lawsuit alleges that this software sale should have been counted as part of mainframe revenue, instead of as AI, cloud and other advanced tech.

IBM is said to have wanted to change its image from a mainframes company to a “cognitive solutions” and cloud computing platform. As a result, IBM is alleged to have inflated financial results that falsely showed revenue increases for emerging tech, such as Watson AI products.

The plaintiff, June E. Adams Irrevocable Trust, is seeking compensatory damages, a rescissory measure of damages, and costs for bringing the legal proceedings and demanding a jury trial.

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