Shareholders Sue Netflix

Class-action suit says company issued 'misleading statements'

By Kevin Spak,  Newser Staff

Posted Jan 18, 2012 1:02 PM CST

(Newser) – Netflix's shareholders are none too happy with the streaming video giant's plummeting share price, and now they're biting back with a class action lawsuit. The suit, filed recently in California, alleges that Netflix "issued materially false and misleading statements," and failing to disclose crucial info. The latter includes the duration of its contracts with content providers, many of which were short and would soon have to be renegotiated at higher rates, Paid Content reports.

The suit was filed on behalf of the City of Royal Oak Retirement System, and covers anyone who bought Netflix stock from December 20, 2010 through October 24, 2011. It notes that CEO Reed Hastings sold 190,000 shares over that stretch, making $43.2 million in the process. Netflix shares opened this morning at $93.18 each—down from a high of $291.27 in July.

In this July 20, 2010 file photo, a Netflix subscriber turns on Netflix in Palo Alto, Calif.
In this July 20, 2010 file photo, a Netflix subscriber turns on Netflix in Palo Alto, Calif.   (AP Photo/Paul Sakuma, file)
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