MoviePass Being Sued By Shareholders

Moviepass Being Sued By Shareholders

In the wake of MoviePass’ parent company Helios and Matheson reporting an operating loss of $126.6 million for the most recent quarter ending June 30th (compared with a loss of under $3 million this time last year), news has come of a class action lawsuit against the company and its CEO Ted Farnsworth and CFO Stuart Benson.

Shareholder Jeffrey Braxton filed suit Monday in a New York federal district court in on behalf of hundreds of investors who suffered losses because they were misled about the company’s business and prospects. The suit contends its business model was unsustainable and that it was inevitable Helios would run out of cash and could not monetize the model before it became too buried in debt to survive. Part of the lawsuit says as follows:

“Defendants carried out a plan, scheme and course of conduct which was intended to and did, deceive the investing public and cause the plaintiff and other members of the class to purchase Helios common stock at artificially inflated prices… Both of the individual defendants are liable as participants in a fraudulent course of business that operated as a fraud or deceit on purchasers of Helios common stock by disseminating materially false and misleading statements and/or concealing material adverse facts.”

The company’s stock has lost 96% of its value in the past three weeks. Braxton asks the court to certify the complaint as a class action suit and to hold a trial so he and others could seek to recover their losses.

Interestingly the company just opened a contest for an ‘Ultimate MoviePass Getaway’ which includes two round-trip flights to LA, a two-night hotel stay, a studio tour, a Hollywood Bus tour, two annual MoviePass memberships and a $500 gift card.

Source: The Wrap & Deadline