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Business litigation can take many forms, including disputes with customers, suppliers and subcontractors. But for Manhattan corporations, there are other parties who may initiate business litigation, namely shareholders. A shareholder dispute is a common source of business litigation. Recently, a well-known theme park owner found itself the target of litigation in response to allegations that statements made by company representatives artificially inflated the company’s stock price.
SeaWorld Entertainment Inc. is known for its exhibition of killer whales and other sea creatures. Several years ago, a documentary was made that criticized SeaWorld’s practices regarding its captive killer whales. Now plaintiffs are proceeding with a lawsuit that alleges SeaWorld intentionally misled shareholders about the impact of the documentary on SeaWorld’s business.
Reports indicate that SeaWorld officials denied in early 2014 that the documentary was having a negative impact on business. The plaintiffs allege that these denials were contradicted by internal company emails. After the company acknowledged the negative impact of the documentary in August 2014, the value of the company’s stock sank by more than one-third and has not recovered.
On November 30, a federal judge granted class-action status to a group of shareholders who purchased shares during the period in which the company allegedly made misleading statements about the impact of the documentary. The federal government is also reportedly investigating the situation, in which company officials allegedly sold shares while denying the negative impact of the documentary.
Shareholders are entitled not to be misled by a company’s officers, and companies are entitled to their day in court in response to shareholder allegations. For parties grappling with the effects of a shareholder dispute, experienced and effective legal counsel can be key.
Source: ksat.com, “Federal judge approves class-action status in SeaWorld lawsuit,” Mike DeForest, Nov. 30, 2017
