Dissatisfied Investors Sue Netflix

Class action lawsuit has not been accepted by a court yet.

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    NEWSLETTERS

    A class action suit on behalf of investors has been filed against Netflix.

    A class-action lawsuit has landed on Netflix's management team, filed by investors who allege the company did not disclose key information around their streaming deals with content providers, according to paidContent.org.

    The suit, filed in U.S. District Court in Northern California, lists CEO Reed Hastings, CMO David Wells, Chief Content Officer Ted Sarandos, Chief Product Officer Neil Hunt and CMO Leslie Kilgore as defendants.

    Netflix stock has fallen from $291.27 on July 12, 2001, to $97.51 this morning. The suit notes that company officers, referred to as "insiders," sold shares when stock was high, netting a reported $90.2 million between them. As the site notes, the circumstances around those sales is not known (they could have been pre-scheduled, etc.).

    One key allegation is that "the defendants concealed from the investing public" the fact that the company had short-term contracts with content providers and that a "Hobbesian choice" needed to be made in 2011.

    The entire suit is available here.

    Disclosure: NBCUniversal is mentioned in the suit, but only in context to its content-sharing deal made with Netflix (page 13 of the suit).