Netflix Hit With Shareholder Derivative Lawsuit in Calif.
Netflix executives and board members made “materially false” and misleading statements about the health of the company’s “business, operations, and prospects” until mid-April, influencing its plunging stock price, alleged a shareholder derivative complaint Aug. 16 in U.S. District Court in…
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San Francisco. Unlike the two direct class-action lawsuits filed this spring in which shareholders alleged they suffered financial harm when top Netflix executives breached their fiduciary duties by failing to disclose to investors that account sharing and increased competition from other streaming services were creating significant challenges (see 2206020049), a shareholder derivative complaint seeks to protect a company’s financial well-being and reputation from the improper actions of its officers and board members. Plaintiff Judith Ormerod, a Pennsylvania resident, owns Netflix shares and will continue to hold them “throughout the pendency of this action,” said her complaint. Ormerod will “fairly and adequately represent the interests of the shareholders in enforcing the rights of the corporation,” it said. Netflix didn’t comment Monday.