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Motorola loses bid to dismiss fraud suit

Fri Sep 26, 2008 6:31am EDT

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Sept 26 (Reuters) - Motorola Inc (MOT.N) and its former chief executive, Edward Zander, will have to face fraud allegations after the company failed in a bid to quash a lawsuit brought by disgruntled shareholders, court documents showed.

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Judge James Moran of the U.S. District Court for the Northern District of Illinois, said in a Sept 23 ruling the claims by shareholder Eric Silverman were strong enough to warrant the case going ahead.

The suit alleges that Zander and other executives of the U.S. handset manufacturer made statements about the company's future that omitted important facts and made material misrepresentations that artificially inflated the value of the company's stock.

Moran, however, absolved two Motorola executives, Gregory Brown and Daniel Moloney, of liability, the documents showed.

The class-action suit was filed in August 2007 for unspecified damages on behalf of anyone who bought Motorola stock between July 19, 2006 and January 5, 2007.

Zander was Motorola's chief from 2004 to 2007. (Reporting by Savio D'Souza in Bangalore; editing by John Stonestreet)

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