SEC sues former MoviePass executives for fraud
The US Securities and Exchange Commission has filed a lawsuit against two former MoviePass executives. In a federal complaint seen by Bloomberg, the agency accused Theodore Farnsworth and Mitch Lowe on Monday of misleading investors about the viability of the company’s $9.95 per month business model.
Farnsworth was the chief executive officer of Helios and Matheson Analytics, the parent company of MoviePass between 2017 and 2020. Lowe led MoviePass between 2016 and its collapse in 2020. The SEC alleges Farnsworth and Lowe “intentionally” and “repeatedly” shared false information.
“Faced with debilitating negative cash flows – rather than tell the public the truth – Farnsworth and Lowe devised fraudulent tactics to prevent MoviePass’s heavy users from using the service, and falsely and misleadingly informed the public that usage had declined naturally or due to measures the company had employed to combat subscribers’ purported violations of MoviePass’s terms and conditions of service,” the complaint states.
In addition to financial penalties, the SEC is seeking to prevent both Farnsworth and Lowe from serving in director or officer positions in any company that’s required to register securities with the agency. The SEC’s lawsuit also names former MoviePass business development executive Khalid Itum as a …read more
