NEW YORK, April 12, 2020 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against World Wrestling Entertainment, Inc. ("WWE" or the "Company") (NYSE: WWE) and certain of its officers. The class action, filed in United States District Court for the Southern District of New York, and indexed under 20-cv-02223, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired WWE securities between February 7, 2019 and February 5, 2020, both dates inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are a shareholder who purchased WWE securities during the class period, you have until May 6, 2020, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
WWE was founded in 1980 and is headquartered in Stamford, Connecticut. The Company engages in the sports entertainment business in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America.
In recent years, WWE entered into important strategic relationships with the Kingdom of Saudi Arabia, which the Company viewed as a critical emerging market and key to the Company's growth plans and financial success in the face of flagging domestic fan engagement. These relationships included a multi-year television distribution rights agreement with the Orbit Showcase Network ("OSN"), a Saudi-controlled direct broadcast satellite provider serving the Middle East and North Africa ("MENA") region, and a 10-year partnership with the Saudi General Sports Authority to host live events in Saudi Arabia.
WWE and its management faced blowback from fans and the media for their willingness to work with the Saudis, given the human rights abuses, denial of equal rights to women and minorities, and autocratic policies imposed during the reign of King Salman bin Abdulaziz Al Saud and his son, Crown Prince Mohammad bin Salman bin Abdulaziz Al Saud ("MBS"). These critical voices reached a crescendo following the October 2, 2018 murder of journalist Jamal Khashoggi, widely believed to be carried out at the direction of the Saudi government.
Controversially, WWE decided to proceed with a scheduled live event in Saudi Arabia, Crown Jewel, on November 2, 2018, soon after the killing. Several prominent wrestlers refused to participate, including John Cena and Daniel Bryan. Although WWE decided to go forward with the event, citing contractual commitments, its representatives openly criticized the Saudi government. For example, WWE's Chief Brand Officer Stephanie McMahon stated it was an "incredibly tough decision, given that heinous act."
Unbeknownst to investors, the events in late 2018 fomented simmering tensions between WWE and the Saudi government. In particular, conservative elements of the Saudi government disliked WWE's portrayal of women and what they viewed as the questionable morality reflected in WWE programming and live shows. At the same time, WWE was under immense pressure to justify its decision to continue working with the Saudi government and outwardly claimed that it was trying to push for change from within the country.
By at least early 2019, tensions in the relationship between WWE and the Saudi government had reached a breaking point. The Saudi government had refused to make millions of dollars in payments owed to WWE. Further, OSN was contemplating the early termination of its obligations under its broadcasting agreement (ultimately terminated in March 2019) and had rebuffed WWE's efforts to renew the agreement. These developments threatened WWE's ability to reach a renewed media agreement in 2019, which the Company told investors was critical to its expansion plans in the MENA region and its growth prospects. Moreover, WWE was facing withering consumer engagement in its traditional markets, heightening the need for the Company to reach an agreement with the Saudis on favorable terms.
The complaint alleges that throughout the Class Period, rather than disclose these adverse developments, Defendants represented that WWE had continued to bolster its relationship with Saudi Arabia and was making significant progress on the renewal of the critical media agreement and its business initiatives in the country. For example, Defendants stated that WWE's "important partnership with the [Saudi] General Sports Authority" was "expected to continue to constitute a significant percentage of [WWE's] revenues" and that the Company had reached an "agreement in principle" on a renewed media rights deal for the MENA region. In reality, however, the prospects for a deal continued to worsen throughout the Class Period, as the Saudi government failed to make millions of dollars in additional payments owed to WWE following a June 2019 live event held in the country and the negotiations with OSN floundered.
Defendants are liable for: (i) making false statements; or (ii) failing to disclose adverse facts known to them about WWE. Defendants' fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of WWE securities was a success, as it: (i) deceived the investing public regarding WWE's business and prospects; (ii) artificially inflated the price of WWE securities; (iii) permitted certain senior executives of WWE to sell more than $282 million worth of their personally held shares of Company stock at fraud inflated prices; and (iv) caused Plaintiff and other members of the Class (defined below) to purchase WWE securities at artificially inflated prices.
The behind-the-scenes turmoil began to be revealed in a series of partial disclosures. On April 25, 2019, the Company disclosed disappointing financial results and fiscal guidance, which several analysts connected to potential hiccups in the Company's dealings with the Saudis. While Defendants insisted that negotiations were proceeding smoothly and nearing completion, this illusion was shattered on October 31, 2019. In connection with the release of the Company's third quarter 2019 financial results, WWE revealed significant underperformance across key metrics and shocked the market by revealing that the vaunted MENA media rights deal had been indefinitely delayed. Around this same time, it was reported that the Saudi government had withheld tens of millions of dollars in payments owed to WWE. The dispute spiraled out of control, culminating in a decision by WWE to cut a broadcasting feed of a live event held in the country. In retaliation, the Saudi government temporarily refused to allow several WWE wrestlers to leave the country in what was later described as akin to a "hostage situation" under the pretense of mechanical airplane issues. Then, on January 30, 2020, WWE revealed that two of its longest serving senior executives – Defendants George A. Barrios and Michelle D. Wilson – had been unceremoniously ousted. Shortly thereafter, on February 6, 2020, WWE again disclosed disappointing financial performance due to its failure to secure a favorable broadcasting deal with the Saudis and revealed that the vaunted Saudi media rights deal had been completely excised from the Company's financial forecasting.
As a result of these disclosures, the price of WWE stock plummeted from a Class Period high of more than $100 per share to as low as $40.24 per share on February 6, 2020, representing a stunning 60% share price decline. However, the Company's most senior executives – including each of the Individual Defendants (defined below) – took advantage of WWE's inflated stock price to sell millions of dollars' worth of their own WWE shares during the Class Period. In a single stock sale, WWE's Chief Executive Officer ("CEO"), Defendant Vincent K. McMahon, sold more than 3.2 million WWE shares for over $261 million in gross insider trading proceeds. This sale occurred on March 27, 2019, with only a few days left in the Company's disappointing 2019 first quarter and despite growing behind-the-scenes problems with the Saudis.
Outside investors were not so fortunate, suffering hundreds of millions of dollars in losses and economic damages under the federal securities laws as the price of WWE stock collapsed when the truth finally began to be revealed over time.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
Robert S. Willoughby
SOURCE Pomerantz LLP