CBS shareholders allege insider stock sales by executives ahead of Moonves scandal
The legal fallout from the Les Moonves sexual misconduct scandal is deepening, with CBS shareholders filing an amended complaint to their class-action lawsuit alleging more than $200 million in insider stock sales leading up to the scandal.
The shareholders filed their new complaint Monday in federal court in New York, amending their original suit from October that accused the network of failing to disclose financial risk related to the #MeToo movement.
Their new accusations accuse top CBS executives of committing fraud when they dumped shares before news of the Moonves scandal broke. The suit alleges that Moonves and other network executives collectively sold more than 3.4 million shares for more than $200 million.
The complaint states that the timing and amount of the “stock sales by these executives were unusual and suspicious,” taking place between mid-December 2017 and May 2018. That was months before the Moonves scandal broke in the New Yorker magazine.
“The vast majority of sales mentioned in this complaint were made as part of preplanned selling arrangements designed to comply with applicable securities laws,” CBS said in a statement. “The remaining sales were subject to CBS’ customary preclearance policies and procedures and were properly disclosed. While it would not be appropriate to comment on ongoing litigation, we believe that our policies and procedures are fully in compliance with law.”
CBS shareholders claimed in Monday’s filing that during the period in question, Moonves sold $155 million in shares, while former CBS Chief Operating Officer Joseph Ianniello sold $29 million in shares. They also cite stock sales from former CBS communications officer Gil Schwartz and Chief Accounting Officer Larry Liding.
“They were timed to capitalize on CBS’ inflated stock price before defendant Moonves’ misconduct and the pervasive sexual harassment that permeated the company was revealed to the market,” the filing states.
The New Yorker first reported on Moonves’ behavior in July, with accounts of alleged sexual misconduct from six women, including actress Illeana Douglas and writer Janet Jones. As the scandal widened, Moonves resigned from the network in September.
The lead plaintiff in the case is the Construction Laborers Pension Trust for Southern California. It is seeking unspecified compensatory damages.
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