CBS is the object of a class action suit which claims that the drop in the network’s share price following revelations of alleged sexual behavior by CBS CEO Leslie Moonves is essentially a case of fraud on the part of the company.
Filed Aug. 27 in U.S. District Court for the Southern District of New York, the suit by shareholder Gene Samit targets CBS, Moonves and COO Joseph Ianniello. It charges that CBS made “materially false and misleading statements regarding the Company’s business, operational and compliance policies.” Those false and misleading statements include CBS’s failure to disclose that Moonves “had engaged in widespread workplace sexual harassment.”
Samit’s complaint says that he purchased CBS securities at “artificially inflated prices” prior to the disclosure of the sexual harassment allegations and that his financial holdings were damaged once the situation was made public.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities,” the suit goes on to claim, “Plaintiff and other Class members have suffered losses and damages.”
The suit notes that CBS’s Business Conduct Statement specifically addresses sexual harassment. “Discriminatory treatment, including sexual harassment, or a person’s race, age or other protected status, is strictly prohibited,” according to the BCS. “CBS will take all steps necessary and appropriate to stop such acts of harassment or discrimination of which it becomes aware.”
In its 2015 proxy statement, the network touted its BCS program, specifically noting its commitment to providing “a bias-free and harassment-free workplace environment.”
The suit argues that making such statements created a false picture of CBS, which led to an unmerited upturn in valuation of its securities that were adversely impacted by the current scandal.
Samit’s suit demands payment for the damages sustained.