CBS and former Chief Executive Officer and Chairman Leslie Moonves have fired back at accusations that they failed to disclose information they knew would affect the company’s stock price in legal briefs in response to a shareholder lawsuit.
The lawsuit, which was filed by the Construction Laborers Pension Trust for Southern California in August, accuses CBS of making “materially false and misleading statements” regarding the company’s business, operational, and compliance policies. It said the company failed to disclose that executives had engaged in widespread workplace sexual harassment at CBS. And in February, the plaintiffs filed an amendment to the lawsuit that included accusations of insider trading among the media company’s executives.
In the most recent brief filed by CBS and Moonves, the defendants said that the lawsuit “improperly relies on an incomplete internal investigation and newspaper articles about the #MeToo movement to imply that otherwise dubious allegations regarding decades-old personal conduct somehow are the makings of securities fraud.”
The brief also said it is “implausible that Moonves could have foreseen his departure from CBS at the time of the alleged statements,” adding that this argument “relies on Moonves’s supposed knowledge of mere allegations of past wrongdoing, largely unconnected to CBS.”
Moonves maintained in the brief that the allegations against him of misconduct more than a decade ago are not true, and that he did not act improperly.
“Thus, at the time of Moonves’s statements, he had no reason to believe his departure was imminent,” said the brief, “and, in fact, he believed the truth of his statements.”
The February complaint filed by the pension fund said Moonves reportedly knew about a criminal investigation into sexual assault allegations against him as early as November 2017, and believed by early December 2017, “that an article about him would be published imminently” that could detail accusations of sexual misconduct and assault.
The plaintiffs said Moonves and other executives sold tens of millions of dollars worth of stock between mid-December 2017 and May 2018, adding that the timing and amount of the stock sales were “unusual and suspicious.”
According to CBS’ annual proxy statement, which was filed last week with the SEC, Moonves forfeited $34.5 million in company stock awards in 2018 as part of the settlement agreement when he left the company amid sexual misconduct allegations against him.