Most of the top executives allegedly sold shares at a higher cost, sensing the company would struggle to meet financial expectations
Netflix is facing legal action over claims from shareholders, who said it released misguiding statements to stave off a plunge in company’s shares.
The shareholders claim that most of the top executives sold shares at a higher cost, sensing the company would struggle to meet financial expectations.
The top executives were said to be aware that many short-term contracts of the company were ought to be negotiated again.
After its decision to spin-off DVD through mail service, Netflix is said to have lost almost one million customers.
Netflix is reported to be enriching its content with a range of new deals, including an agreement with Warner Brothers.
In addition to its current deal with BBC, Netflix looks to add Disney, Sony, Paramount and ITV and a tie-up with Sony will also see it bundled on to PlayStation Vita when it launches itself in the US and Europe.
The shareholders filed a class-action lawsuit against the company through law firm Robbins Geller Rudman & Dowd in a California federal court.
The lawsuit seeks defence from Reed Hastings (CEO), David Wells (CFO), Ted Sarandos (chief content officer), Neil Hunt (chief product officer) and Leslie Kilgore (chief marketing officer).
The suit states that false disclosures resulted in a Netflix stock collapse from $118.84 per share on October 24, 2011 to $80.86 per share on October 27, 2011, on volume of 76 million shares over three days.