* BlackBerry questions methods used in research report
* Detwiler Fenton report talks of high return rate
* BlackBerry shares close slightly higher on the Nasdaq
By Euan Rocha and Emily Flitter
TORONTO/NEW YORK, April 12 BlackBerry
plans to ask securities regulators in Canada and the United
States to probe what it said is a "false and misleading" report
that consumer return rates for BlackBerry's new Z10 smartphone
have been especially high.
The Canadian company, which has pinned its turnaround hopes
on its new BlackBerry 10 line of smartphones, went on the
offensive on Friday after the report from Boston-based research
and investment firm Detwiler Fenton sent its stock tumbling on
BlackBerry said return rates for its flagship Z10 devices
have been at, or below, its forecasts and in line with industry
"To suggest otherwise is either a gross misreading of the
data or a willful manipulation," Chief Executive Thorsten Heins
said in a statement. "Such a conclusion is absolutely without
basis and BlackBerry will not leave it unchallenged."
BlackBerry said Detwiler Fenton had so far refused to share
its report or its methods. It said it would present a formal
request for an investigation to the U.S. Securities and Exchange
Commission and to the Ontario Securities Commission, which is
Canada's major securities regulator, over the next few days.
Detwiler has had run-ins with regulators in the past,
documents reviewed by Reuters show. But none of the cases
involved questions about the accuracy of Detwiler's research or
were linked to BlackBerry.
The OSC said it would review the matter once it receives a
"After the first 14 days, quality performance of the Z10 has
been in line with similar devices we've launched," said Debra
Lewis, a spokeswoman for Verizon Wireless.
A spokeswoman for Detwiler did not respond to a phone call
and an email from Reuters seeking comment. The director of
research also did not respond to a call seeking comment.
"We believe key retail partners have seen a significant
increase in Z10 returns to the point where, in several cases,
returns are now exceeding sales, a phenomenon we have never seen
before," its report said. Detwiler Fenton gave no details on how
it had gleaned this information.
While a number of brokerage firms have in recent weeks
published reports saying Z10 sales in the U.S. market are slow,
none of them have flagged any major concerns about returns.
Since 2007, the Financial Industry Regulatory Authority, the
industry body that oversees broker-dealers, has fined Detwiler
over $250,000 and has cited it for several compliance violations
over the past decade.
In December 2011, FINRA sanctioned Detwiler for failing to
properly supervise its employees and for allowing its brokers to
make more trades than necessary in clients' accounts to boost
commissions during a period between 2006 and 2009.
In 2007, the firm, which was then called Detwiler Mitchell
Fenton & Graves, settled administrative proceedings that the SEC
brought against it for failing to supervise Bradford Bleidt, a
former employee who had been simultaneously running a $30
million Ponzi scheme.
BlackBerry is attempting to claw back market share lost to
rivals such as Apple Inc's iPhone and Samsung
Electronics Co's Galaxy line of smartphones with its
new line of devices, powered by the revamped BlackBerry 10
The new Z10 touchscreen smartphone, the first of its new
devices, hit store shelves earlier this year. And the Q10, with
BlackBerry's famed physical keyboard, will go on sale in Canada
and the United Kingdom before the end of April.
BlackBerry, which has changed its name from Research In
Motion, has yet to prove to the market that its new devices can
trigger a turnaround. The company expects to report break-even
results in the current quarter, but a true picture will not
emerge until later this year.
BlackBerry stock has remained highly volatile as analysts
are split on whether the turnaround plan will succeed. Research
reports often bring major swings in the company's share price.
Shares of Waterloo, Ontario-based BlackBerry, which
fell 7.7 percent on Thursday, closed up less than a percent on
Friday at $13.64 on Nasdaq.