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Shareholders Bring Class Action Against Netflix for Securities Law Violations
On January 13, 2012, City of Royal Oak Retirement System, on behalf of all purchasers of securities of Netflix, Inc. between December 20, 2010 and October 24, 2011, brought a class action in the United States District Court for the Northern District of California against Netflix and certain of its directors and officers for securities law violations. Netflix is a subscription-based service that streams television shows and movies over the Internet and delivers DVDs to the homes of subscribers.
The complaint alleges that the defendants gave false and misleading statements regarding the company’s business practices and contracts with content providers. The plaintiff claims that the defendants knew but did not disclose to the public that Netflix had short-term contracts with content providers that could only be renewed at substantially higher costs, which would require the company to increase its prices, and that Netflix would be unable to meet its earning forecasts for 2011.
The plaintiff alleges that due to the defendants’ false statements, the plaintiff and other members of the class purchased Netflix shares at artificially inflated prices and suffered economic loss when the share price dropped substantially after the market learned of the misrepresentations. The complaint also alleges that company insiders sold their own shares at the inflated share prices, netting $90.2 million.
For a copy of the press release, visit:
http://www.rgrdlaw.com/cases-netflix.html
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