Moviepass Parent Company Target Of Class-Action Lawsuit For Alleged Securities Fraud Violations

On August 18, 2018, shareholders of Helios & Matheson Analytic (HMNY), parent company of MoviePass, filed a class-action lawsuit claiming that HMNY defrauded shareholders by offering misleading information about the financial health of the company. The lawsuit, which was filed in the Southern District of New York, accuses HMNY of deliberately deceiving the investing public into purchasing their stocks at ‘artificially inflated prices.’

For more information, contact Attorney Group today. Our consultations are free, confidential and without any obligation on your part. We can help answer your questions, and if you choose to pursue a claim we can connect you with an affiliated consumer protection attorney who can assist you throughout the legal process.

Moviepass Financial Troubles

HMNY stocks have dropped below $1, the minimum to remain listed on Nasdaq, more than once in the last 6-month period. On June 21, 2018, they received a letter from Nasdaq warning them that they’re in danger of being de-listed. They were given until December 18, 2018 to bring their shares up above $1.

Then, on July 6, 2018, the popular subscription-based movie service, MoviePass, experienced a complete outage when the company ran out of funds. The following day, HMNY filed a Form 8-K with the Securities and Exchange Commission (SEC). A Form 8-K is used to notify the SEC and the investing public when an unscheduled event occurs within the company that could affect shareholders or the SEC, itself. The filing, in part, included HMNY admitting that they had to borrow nearly $6 million to resume MoviePass operations following the outage.

Immediately following the Form 8-K filing, HMNY stocks plummeted nearly 59%. Two weeks later, the company notified the SEC in another filing that it had experienced a net loss of over $63 million since May, including the drastic losses following the July outage.

As of August 14, 2018, HMNY admits ‘substantial doubt’ about its ability to continue the operations of MoviePass without raising significant amounts of additional capital.

Class-Action Lawsuit

The class-action lawsuit was filed on behalf of investors who purchased HMNY stock between August 15, 2017 and July 26, 2018. The lawsuits lists’ HMNY CEO, Ted Farnsworth, and CFO, Stuart Benson, as defendants.

The lawsuit alleges that:

  1. HMNY exaggerated MoviePass’ valuation and path to profitability
  2. The MoviePass business model was never sustainable
  3. It was inevitable that HMNY would run out of cash
  4. The defendants’ actions were further reducing shareholder value
  5. All HMNY statements about the business, operations, and prospects for MoviePass were false, misleading, and/or lacked a reasonable source

Furthermore, the lawsuit claims that by the time the true facts about MoviePass operations were revealed to the investing public, the investors had already suffered damages and loss.

The August 18, 2018 class-action lawsuit isn’t the only one. A similar suit was filed on August 2, 2018, in the same Southern District of New York.

How A Lawsuit Can Help

Investors who suffered damages and financial losses due to HMNY’s alleged deceit may be entitled to compensation.

The SEC and other federal laws have strict guidelines about securities fraud and offer several ways to recoup investors losses, including the recovery of other assets owned by the defendants and corporate bankruptcy.

The Time You Have To Pursue A Claim Is Limited. Contact Us Today.

For more information, contact Attorney Group. After you contact us, an attorney will follow up to answer questions that you might have. There is no cost or obligation to speak with us, and any information you provide will be kept confidential.

Please note that the law limits the time you have to pursue a claim or file a lawsuit for an injury. If you think you have a case, you should not delay taking action.