World Wrestling Entertainment has been hit with another lawsuit, this time from two shareholders who filed documents against top company executives.
On April 24, Ryan Merholz and Melvyn Klein filed a lawsuit against WWE, Vince McMahon, Stephanie McMahon, Paul Levesque, Frank Riddick III, Stuart Goldfarb, Laureen Ong, Robyn Peterson, Man Jit Singh, Jeffery Speed, Alan Wexler, and George Barrios.
The lawsuit alleges WWE executives were involved in a number of acts that weren’t in the best interest for shareholders.
The following complaints were included in the 44-page filing.
Breach of fiduciary duties
Waste of corporate assets
Violations of Section 10(b) of the Securities Exchange Act of 1934 that occurred between February 7, 2019 through the present and have caused substantial harm to the Company.
Make false statements
Failing to disclose adverse facts known to them about WWE
Misleading the investing public regarding WWE’s business and prospects
Artificially inflating the price of WWE securities
Permitting certain senior executives of WWE to sell more than $282 million worth of their personally held shares of Company stock at inflated prices
Causing damages to the Company as a result, including the initiation of a proposed class action for securities fraud against the Company
The lawsuit alleges growing problems between the WWE and the Kingdom of Saudi Arabia, which analysts claim is connected disappointing financial results.
“The Company’s most senior executives and directors took advantage of WWE’s inflated stock price to sell millions of dollars’ worth of their own WWE shares during this time period. In a single stock sale on March 27, 2019, WWE’s Chief Executive Officer (“CEO”) and Chairman of the Board, Defendant V. McMahon, sold more than 3.2 million WWE shares for over $261 million in proceeds. This sale occurred when there were only a few days left in the Company’s 2019 first quarter which insiders knew was experiencing poor financial performance and despite growing behind-the-scenes problems with the Saudis.”
The filing has a full timeline of events, including the rumored incident where WWE talent were “held hostage” in retaliation for Vince McMahon’s delay of the Crown Jewel broadcast.
“That same day, WWE held the Crown Jewel live event in Riyadh, Saudi Arabia. After the event ended, shocking news reports surfaced claiming that the Saudi government was effectively holding a number of WWE wrestlers “hostage” in retaliation for McMahon’s decision to delay a live broadcast of Crown Jewel until the Saudis made tens of millions of dollars in past due payments. Estimates for the amount outstanding ranged from $60 million to as much as $500 million. Several wrestlers detailed their experience during the ordeal on social media platforms”
The entire filing can be viewed below.
WWE has been hit with similar lawsuits from shareholders earlier this year, including a class action lawsuit filed March 6 from the City of Warren Police and Fire Retirement System