Did Your CBS Stock Value Drop After Moonves Allegations?

After the sexual misconduct allegations against the former CBS Chairman and CEO Les Moonves were first brought to light, CBS stock value took a hit, affecting the company’s shareholders. These shareholders may be able to band together and file what is known as a derivative lawsuit, alleging that the board failed to take proper actions to deal with the allegations of assault and harassment, thus taking a financial toll on the company.

The New Yorker reports that CBS shareholders believe that the company failed to properly hold Moonves accountable after they learned of the allegations against him.

This is not the first time that the value of CBS stock has been endangered by allegations of sexual misconduct. Charlie Rose was removed in 2017 for multiple accusations, and similar accusations have been made against Jeff Fager, the executive producer of “60 Minutes.”

What is a Derivative Lawsuit?

Shareholders have very little power in the companies they own stock in, as individuals. But as a whole, the shareholders are the ones to whom the board of directors must answer for its operations and choices.

A shareholder’s derivative lawsuit is different than a direct claim, which a shareholder in a company may also file. A derivative lawsuit is filed by a shareholder on the corporation’s behalf. Essentially, the shareholders who file the lawsuit (usually a group of them file together) are acting as a representative of the corporation, often against something that management has done wrong. This can include fraud and other breaches of duty.

Shareholders may also file a direct claim if a corporation violated its duty to that specific shareholder. Causes of action in a direct claim can often include unfair treatment, fraud, conspiracy, and breach of statutory duties.

Shareholders and CBS Stock Value

Even though the board of directors manages day-to-day choices in place of the shareholders, the board of directors makes choices including management supervision on behalf of the shareholders. Generally, shareholders keep out of the way of the board, but in some situations—as when the board makes devastating financial decisions or doesn’t respond well to a company crisis—the shareholders can step in.

Systemic sexual assault allegations against Les Moonves are the latest in a series of allegations against high-profile CBS employees. In July 2018, The New Yorker reported on six women who accused Moonves of sexual assault or sexual harassment. Later, in September, another story was published with further sexual abuse allegations.

CBS announced that Moonves would be stepping down only after that second story was published in September. Critics say that CBS should have fired Moonves immediately after the allegations were made known, which other companies in a similar position have done.

Some CBS stock shareholders believe that taking firmer action against Moonves earlier on could have prevented the drastic drop in stock. According to The Los Angeles Times, CBS stock shares fell 6.12 precent the day that the Moonves news broke in July. A shareholder class action lawsuit has already been levels against CBS over the financial hit they’ve taken due to the drop in CBS stock value.

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

If you are a CBS shareholder, especially if you have held shares for the last four years, and your stock value took a hit after the sexual misconduct allegations against the former CBS CEO Les Moonves came to light, you may be able to help bring a shareholder derivative lawsuit on behalf of the company.

Join a Free CBS Shareholder Lawsuit Investigation

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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