SEC sues former MoviePass executives for fraud

The Securities and Exchange Commission has sued former top executives at MoviePass and its parent company, Helios & Matheson , for fraud. The complaint, filed Monday in the U.S. District Court for New York’s southern district, alleges Ted Farnsworth and Mitch Lowe “intentionally and repeatedly disseminated to the public materially false or misleading statements concerning MoviePass and key aspects of MoviePass’s business model.” The suit charges Farnsworth and Lowe misled investors by suggesting the company could profit by offering all-you-can eat moviegoing for $9.95 a month. The legal team representing Lowe told MarketWatch it disagrees with the SEC’s “characterization of Mitch’s conduct, including allegations about statements made about the progress in building MoviePass. Bringing new commercial concepts to the market can be disruptive and uneven. Mitch remains proud of what was accomplished at MoviePass and intends to work within the legal process to resolve these allegations.” A spokesman for Farnsworth added that the complaint “concerns matters subject to an investigation that the company and other news outlets publicly disclosed nearly three years ago, and Mr. Farnsworth’s legal team will maintain the challenge to this complaint. Mr. Farnsworth continues to maintain that he has always acted in good faith in the best interests of his companies and shareholders.” Farnsworth is the former chief executive of analytics firm Helios & Matheson Analytics Inc., which acquired MoviePass in 2017 and ran it until it sank into bankruptcy in 2020. Lowe was MoviePass CEO from 2016 to 2020.

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