It looks like the entertainment company Netflix may have gotten themselves into some hot water. A class action lawsuit filed by several stockholders claims Netflix gave false and misleading statements about their contractual agreements with studios. The Netflix lawsuit also accuses the company of giving misleading or false statements regarding their business practices.
Apparently, Netflix higher-ups sold 388,661 of their own shares in company stock while it was at a high for $90.2M, and the plaintiffs now want the company to pay up for misleading them before the sell-off.
The Netflix lawsuit states: "Later, when the defendants' prior misrepresentations and fraudulent conduct became apparent to the market, the price of Netflix common stock fell precipitously, as the prior artificial inflation came out of the price over time."
Since Netflix stocks have declined in recent months, this is yet another obstacle for the company, which offers DVD by mail, Mobile and Internet streaming, to overcome. Will they recoup from this?
The defendants named in the class-action lawsuit are, Netflix Chief Executive Officer Reed Hastings, Chief Financial Officer David Wells, Chief Content Officer Ted Sarandos, Chief Marketing Officer Leslie Kilgore, and Chief Product Officer Neil Hunt.
What are your thoughts in the Netflix lawsuit? Do you feel the plaintiffs in the case have a legitimate complaint?
Photo via Wikimedia
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