CBS was hit on Monday with a shareholder class action suit, arguing the company misled investors by failing to disclose sexual harassment allegations against chairman-CEO Leslie Moonves.
Six women accused Moonves of sexual misconduct in a New Yorker article published on July 27. Several of the women said they believed that Moonves had retaliated against them professionally after they rebuffed his forceful advances. CBS has retained Covington & Burling and Debevoise & Plimpton to investigate the allegations.
In the securities lawsuit filed on Monday, shareholder Gene Samit alleges that CBS made a material omission by failing to disclose the allegations against Moonves. The suit also alleges that CBS failed to uphold its “zero tolerance” policy toward sexual harassment and discrimination.
The CBS stock price dropped 6%, to $54.01 a share, on news of the New Yorker story on July 27. As of Monday morning, the stock was trading at $53.62.
The class action suit was brought by Jeremy A. Lieberman, J. Alexander Hood, and Patrick V. Dahlstrom of Pomerantz LLP, a firm that specializes in shareholder class action suits. The suit seeks to represent CBS stockholders who purchased shares between February 14, 2014, and July 27, 2018.
CBS declined to comment.
Last week, the women’s advocacy group UltraViolet sent a letter to members of CBS’ board of directors urging CBS to fire Moonves and to void his severance package with an estimated $150 million to $200 million.
“If the CBS board gives Moonves any amount of severance in the event of his termination or resignation, you will compound the damage you’ve already inflicted on the progress towards stopping sexual violence with your decision to allow Moonves to continue working,” the letter stated.
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