Telus subsidiary Telus International is being sued in a class-action lawsuit in B.C. Supreme Court, with investors claiming the company exaggerated its progress in artificial intelligence and caused them financial losses.
The suit names Telus International, its parent company, and executives, including Telus CEO Darren Entwistle and Telus International CEO Jeff Puritt, as defendants.
The lawsuit, filed last month by investor Kayne Michael Middleton, alleges that Telus overstated its AI capabilities while hiding challenges within its digital services division, known as Telus Digital.
Despite public claims of profitability and market leadership in AI, the lawsuit claims the company’s AI offerings were underperforming, offered on a trial basis, and cannibalized higher-margin products.
According to the suit, between May and August 2024, Telus misrepresented its AI prospects in public filings and earnings calls. These statements allegedly inflated the company’s stock price, leading investors to purchase shares at higher values before prices dropped when the company admitted Telus Digital was struggling.
“For several years, Telus touted its AI strategy and expected resulting profit growth to the investing public,” reads the lawsuit, according to the Vancouver Sun. “Telus’s aspirations of being a forceful player in the market for AI solutions seemed on the brink of becoming reality, with the company boasting of the progress of its AI capabilities and expected profits in earnings calls, documents filed with securities regulators, and other communications with the investing public.”
Lawyer Sam Jaworski, representing the plaintiffs, said investors rely on companies to provide accurate information and should be compensated when that trust is violated.
The lawsuit looks to represent investors who held Telus International shares between February 16, 2023, and August 1, 2024, and experienced losses due to alleged misrepresentations.
Shares of Telus Digital are trading at $5.25 per share as of writing, up 9% for the day. Over the past year, shares are down nearly 57%, and year-to-date down 9%.
The allegations have yet to be proven in court and Telus has not responded to the claims yet. We’ve reached out to Telus for comment and will update this story accordingly.
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