The US Securities and Exchange Commission has filed a lawsuit against two former MoviePass executives. Seen in a federal complaint by The agency accused Theodore Farnsworth and Mitch Lowe on Monday of misleading investors about the viability of the company’s $9.95-a-month business model.
Farnsworth was Chief Executive Officer of , MoviePass’ parent company, between 2017 and 2020. Lowe ran MoviePass between 2016 and its . The SEC alleges that Farnsworth and Lowe “deliberately” and “repeatedly” provided false information.
“Faced with debilitating negative cash flows – instead of telling the public the truth – Farnsworth and Lowe devised deceptive tactics to prevent Heavy MoviePass users from using the service, falsely and misleadingly informing the public that usage was natural or due to Measures taken by the company to address alleged subscriber violations of the MoviePass Terms of Service,” the complaint reads.
In addition to fines, the SEC seeks to bar both Farnsworth and Lowe from serving in directorships or senior positions at any company that is required to register securities with the agency. The SEC’s lawsuit also names former MoviePass business development director Khalid Itum as a defendant. Itum allegedly pocketed $310,000 by providing the company with false bills. Last year, Helios and Matheson, Farnsworth and Lowe settled a Federal Trade Commission lawsuit related to allegations that they misled customers and failed to provide .
“The complaint relates to matters that are the subject of an investigation that the company and other news outlets publicly disclosed nearly three years ago, and Mr. Farnsworth’s legal team will maintain the challenge to this complaint,” said Chris Bond, a spokesman for Ted Farnsworth Bloomberg. “Mr. Farnsworth continues to maintain that he has always acted in good faith in the best interests of his companies and shareholders.”
The suit comes when a new version of MoviePass tries to log in under the . The company recently launched beta service in Chicago, Dallas, and Kansas City, offering packages that include .
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https://www.engadget.com/sec-sues-moviepass-executives-220027888.html?src=rss SEC sues former MoviePass executives for fraud