CBS Sexual Harassment Scandal Reduced Stock Value, Shareholder Class Action Argues

CBS shareholders recently filed a class action lawsuit against the network for losses they allegedly sustained after former CEO Leslie Moonves’ CBS sexual harassment scandal reduced stock value.

Plaintiff Gene Samit recently filed a shareholder derivative class action lawsuit against CBS Corporation and Leslie Moonves, alleging that the defendants mishandled Moonves’ CBS sexual harassment scandal and caused a sharp decrease in stock values. CBS’s COO Joseph R. Ianniello was also named in the class action.

In July 2018, media outlets began to report that the New Yorker would soon be reporting on a CBS sexual assault scandal involving then CEO Leslie Moonves. In September, after the story was reported and new allegations came to light, CBS announced that Moonves would be stepping down. Many criticized this move, arguing that CBS should have fired Moonves as soon as the first allegations were made public.

A complaint was allegedly filed with the Los Angeles Police Deaprtment in 2017 by one of the victims involved in the CBS sexual harassment scandal. The statute of limitations prevented taking criminal action against Moonves, but he allegedly was aware of the allegations and informed the CBS Corporation board long before the scandal was made public.

In his CBS sexual harassment class action, Samit argues that the company failed to disclose information to stockholders that would have made an impact on business and stock performance.

Samit claims that the defendants “made false and/or misleading statements and/or failed to disclose that:  (i) CBS executives, including the Company’s CEO, Defendant Moonves, had engaged in widespread workplace sexual harassment at CBS; (ii) CBS’s enforcement of its own purported policies was inadequate to prevent the foregoing conduct; (iii) the foregoing conduct, when revealed, would foreseeably subject CBS to heightened legal liability and impede the ability of key CBS personnel to execute the Company’s business strategy.”

After the news of the CBS sexual harassment scandal was released, shares of the company’s stock fell 6.12 percent. Samit argues that, had he and other stockholders known about the vital information, they would have been able to make an informed decision about their stocks.

The CBS class action lawsuit also claims that Moonves’ actions were a violation of the company’s own anti-harassment policies, a fact which caused additional damage to stock values. Before the CBS sexual harassment scandal was made public, Moonves allegedly acknowledged these policies in a 2016 letter. He reportedly wrote that CBS “is known for the quality of its people, the content it creates and distributes around the globe and the integrity of its business practices.”

Despite acknowledging the anti-harassment policies, CBS allegedly failed to enforce them when it mattered most.

“CBS’s enforcement of its own purported policies was inadequate to prevent the foregoing conduct,” the CBS sexual harassment class action lawsuit states.

Samit seeks to represent a Class of stockholders who purchased CBS securities within four years of the CBS sexual harassment scandal. The CBS stock class action lawsuit seeks damages, court costs, and attorneys’ fees.

The CBS Sexual Harassment Stock Class Action Lawsuit is Samit v. CBS Corporation et al., Case No. 1:18-cv-07796, in the United States District Court for the Southern District of New York.

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Current CBS shareholders, especially those who have held shares for four years or more, may be eligible for compensation if their stocks took a hit around the time the Les Moonves sexual misconduct allegations were made public.

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