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Netflix facing new lawsuit over 'misleading statements' to investors

Written by Andre Yoskowitz @ 17 Jan 2012 7:09 User comments (1)

Netflix facing new lawsuit over 'misleading statements' to investors

Netflix is now facing a class action lawsuit in California from investors who allege that the streaming giant misled its shareholders while cashing in their own stock.
Senior executives are accused "of issuing materially false and misleading statements regarding the company's business practices and its contracts with content providers" while at the same time cashing in $90 million worth of stock at "inflated prices." A few of the defendants named are chief executive Reed Hastings, finance director David Wells, chief content officer Ted Sarandos, chief product officer Neil Hunt and marketing director Leslie Kilgore.

Reads the lawsuit: "Defendants' statements about Netflix's ability to secure content and maintain profit margins were crucial to investors' evaluation of Netflix. Rather than fully disclose the devastating cost increases which were then threatening Netflix's entire business, defendants talked about its ability to grow. Specifically, defendants concealed negative trends in Netflix's business."

Netflix reached $305 a share during the summer, before falling to $63 in December in practically a straight line. Insiders managed to sell 388,000 shares at prices above $200. The shares closed today near $100.

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1 user comment

118.1.2012 17:34

So if it isn't insider trading was is it? Insider dumping?

just more fuel for the fire on an already loser company who rocked the boat on a 'good/sure thing'. What was best left well enough alone, they had to go & f*k with it.

Greed pure & simple. And just to bury it deeper into somebodies ass, they up & try to throw the fesses into the neighbors back yard & blame it on another's dog.

Don't necessarily take it out on the company, but defenitely take it out on Reed Hastings & rest of his hacienda full of heinie heisters.

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