Telus faces accusations of exaggerating AI capabilities in class-action lawsuit in B.C.
A recent lawsuit against Telus Digital, formerly known as Telus International, was initiated in the B.C. Supreme Court last month. The lawsuit asserts that Telus misrepresented its artificial intelligence (AI) capabilities and provided overly optimistic forecasts for profitability, ultimately leading to financial losses for investors.
As reported by the Vancouver Sun, the lawsuit targets Telus International along with more than a dozen of its executives and directors, including Telus CEO Darren Entwistle and Telus International CEO Jeff Puritt. The lawsuit claims that Telus Digital was faced with challenges in keeping pace with AI technologies while it portrayed profitability expectations in a more favorable light than reality. Despite facing significant hurdles, Telus allegedly concealed these issues from the investing public.
The lawsuit further alleges that Telus failed to disclose key information to investors, such as the fact that its AI services were still in a trial phase, yielded lower margins compared to the company’s traditional offerings, and were encroaching on higher-margin services. These omissions, coupled with the lack of transparency, resulted in an artificial inflation of Telus’ securities on the stock market. Consequently, investors purchased these securities at inflated prices, only to experience a decline in value once Telus openly acknowledged Telus Digital’s challenges in its May and August 2024 earnings reports.
The class-action lawsuit aims to represent individuals who acquired voting shares of Telus International between February 16, 2023, and August 1, 2024, and held onto them during the period marked by the alleged misrepresentations from May 9 to August 1, 2024.
It is important to note that the claims put forth in the lawsuit have not yet undergone legal scrutiny.
In summary, the legal action against Telus Digital underscores the significance of transparency and accuracy in corporate communications, particularly in the realm of emerging technologies such as artificial intelligence. Investors rely on accurate and complete information to make informed decisions, and any discrepancies or omissions can have significant repercussions on financial markets and stakeholders. As the case progresses, it will be interesting to see how the courts address the allegations and whether they will lead to accountability and restitution for affected investors.
