CBS Executive Sexual Misconduct Scandal Prompts Derivative Suit From Shareholders

After the scandal involving CBS executive sexual misconduct became public, a shareholder filed a derivative lawsuit alleging that the company has failed to follow its own anti-harassment policies.

In July 2018, media outlets began to report that The New Yorker would release a report detailing allegations from at least six women of CBS executive sexual misconduct. In September, the story was released, accusing CBS Chairman and CEO Les Moonves of systematically abusing his power to sexually harass and assault women.

Shortly after the news was released, CBS announced that Moonves would be stepping down from his position. Critics of the scandal said that CBS should have fired him instead of letting him resign, especially considering the allegations that the network was aware of the sexual assault claims before they were released by the media.

In 2017, one of the women involved in The New Yorker report filed a criminal complaint against Moonves with the Los Angeles Police Department. LAPD was unable to pursue to allegations due to statutes of limitations, but reportedly found the allegations credible. Some believe that Moonves knew about the criminal complaint and informed executives for the company, but the executives allegedly did nothing.

However, this was not the end of the CBS executive sexual misconduct scandal. Allegations of systematic sexual misconduct cast a negative light on corporate culture which can take a financial toll on the company. After the allegations were made public, a shareholder class action lawsuit was filed alleging that the company’s failure to enforce their anti-harassment policy allowed the CBS executive sexual misconduct to occur.

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

This failure to enforce workplace policies and the subsequent CBS executive sexual misconduct scandal reportedly caused CBS stock value to fall. The Los Angeles Times reported that on the day that the news broke, CBS stocks fell 6.12 percent.

“The market price of CBS securities declined sharply upon public disclosure of the facts alleged herein to the injury of plaintiff and class members,” the CBS executive sexual misconduct class action claims.

The class action regarding the CBS executive sexual misconduct scandal is a derivative suit. Derivative suits, unlike direct claims, are allegations brought by a shareholder on behalf of the corporation. Plaintiffs in a derivative suit often do so as a representative of the company when they believe that the higher-ups in the company failed to uphold their fiduciary duty, or their obligation to act in the best interest of the shareholders.

Derivative suits are the only way that a shareholder can bring breach of fiduciary duty claims. These suits are often used to expose fraud and can be powerful for exposing wrongdoing or fraud found in the higher levels of the company.

If you were a CBS Corporation shareholder at the time the CBS executive sexual misconduct news was released, and held your stocks for four years of more, you may qualify to join in a CBS stockholder derivative lawsuit investigation.

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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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