Vince McMahon is having a terrible 2020 after it started off so well for him.
The WWE head honcho had to watch his football league die a painful death after the coronavirus pandemic made them shut the doors on their first season and it appears it won’t be seeing another season.
Now, shareholders are also calling into question the company’s ties with Saudi Arabia, and accusing McMahon of using a”fraudulent scheme” in a new lawsuit.
“Investment firms Levi & Korsinsky, Glancy Prongay & Murray, Kessler Topaz Meltzer & Check, and Ryan Merholz & Melvyn Klein have alleged wrongdoings in class action suits that name Vince McMahon, Paul (Triple H) Levesque, Stephanie McMahon, and several other major executives at WWE, including former WWE Co-President George Barrios.
The Levi & Korsinky lawsuit alleges that WWE “deceived the investing public” in numerous reports that were issued. In a press release by the firm, they claim that WWE “made materially false and/or misleading statements and/or failed to disclose that: Defendants perpetrated a fraudulent scheme which: (i) deceived the investing public regarding WWE’s business and prospects; (ii) artificially inflated the price of WWE Class A common stock; (iii) permitted certain senior executives of WWE to sell more than $282 million worth of their personally held shares at fraud inflated prices; and (iv) caused the public to purchase WWE Class A common stock at artificially inflated prices.”
The Ryan Merholz & Melvyn Klein filing questions WWE’s relationship with the Kingdom of Saudi Arabia, specifically mentioning the situation that happened in 2019 when several WWE personnel had difficulty returning from a show in the Kingdom.
“WWE held the Crown Jewel live event in Riyadh, Saudi Arabia. After the event ended, shocking news reports surfaced claiming that the Saudi government was effectively holding a number of WWE wrestlers ‘hostage’ in retaliation for McMahon’s decision to delay a live broadcast of Crown Jewel until the Saudis made tens of millions of dollars in past due payments. Estimates for the amount outstanding ranged from $60 million to as much as $500 million. Several wrestlers detailed their experience during the ordeal on social media platforms.”
The lawsuit from Glancy Prongay & Murray alleges that WWE hasn’t been honest with investors and they mention WWE misleading shareholders by attributing their decreasing live event attendance and declines in the product overall to injured talent.
That legal filing reads as:
“On April 25, 2019, WWE reported that for first quarter 2019, revenue declined year-over-year, notably in the live events and consumer products segments. Though the Company attributed the decline to the absence of certain “Super Stars,” several analysts connected the results to difficulties securing a media rights deal for the Middle East and North Africa (“MENA”) region with the Kingdom of Saudi Arabia.
On this news, the Company’s share price fell $13.12 per share, or over 13%, to close at $85.38 per share on April 25, 2019, thereby injuring investors.
Then, on October 31, 2019, in connection with the Company’s third quarter 2019 financial results, WWE lowered its fiscal 2019 adjusted OIBDA guidance to a range of $180 million to $190 million, stating that “no assurances” could be made that a media rights deal for the MENA region would ever be completed.”
WWE has yet to publicly speak out on these allegations.