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August 8, 2020

Lawsuit Filed Against Shane McMahon and Ideanomics

Shane McMahon has been named in a lawsuit against Ideanomics, the company which McMahon serves as Vice Chairman of the Board.

Ideanomics has several different divisions including commercial electric vehicles, and next generation financial services. The company owns dbot, Fintech Village, Intelligenta, Liquefy, Logistorm, and Treeletrik. The company is headquartered in New York City, and has offices in China.

The Verified Shareholder Derivative Complaint filed against Individual Defendants and together with Ideanomics, the “Defendants”) for breaches of their fiduciary duties as controlling shareholder, directors and/or officers of Ideanomics, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violation of Section 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).

The filing outline’s Shane McMahon’s role within the company.

“Defendant Shane McMahon (“McMahon”) has served as a Company director since July 2010. He has also served as Vice Chairman since January 2016. Defendant McMahon also served as the Company’s CEO in 2012, during which time he made a $3 million loan to the Company in consideration for a convertible note in the aggregate principal amount of $3 million at an annual interest rate of 4%. The Company has executed several amendments to extend the maturity date of the note due to McMahon, most recently to December 31, 2020. According to the 2019 Proxy Statement, as of November 15, 2019, Defendant McMahon beneficially owned 6,090,589 shares of the Company’s common stock, 5 which represented 4.5% of combined common stock and Series A stock of the Company. Given that the price per share of the Company’s common stock at the close of trading on November 15, 2019 was $0.70, Defendant McMahon owned approximately $2.1 million worth of Ideanomics stock, at least. 67. For the fiscal year ended December 31, 2017, Defendant McMahon received $339,354 in compensation from the Company. This included $20,250 in fees earned or paid in cash, $25,000 in stock awards, and $294,104 in option awards.

The lawsuit provides additional details that outline Shane McMahon’s role in making misleading false and misleading statements:

“Additional reasons that demand on Defendant McMahon is futile follow. Defendant McMahon has served as a Company director since July 2010. He has also served as Vice Chairman since January 2016 and served as the Company’s CEO in 2012. Defendant McMahon has received and continues to receive compensation for his role as a director, as described above. As a longtime Company director, he conducted little, if any, oversight of the Company’s engagement in the schemes to make false and misleading statements during the First and Second Relevant Periods, consciously disregarded his duties to monitor such controls over reporting and engagement in the schemes, and consciously disregarded his duties to protect corporate assets. Furthermore, Defendant McMahon signed, and thus personally made the false and misleading statements in 2017 10-K. For these reasons, too, Defendant McMahon breached his fiduciary duties, faces a substantial likelihood of liability, is not independent or disinterested, and thus demand upon him is futile and, therefore, excused.”*

* Demand is excused because of futility when a complaint alleges with particularity that the challenged transaction was so egregious on its face that it could not have been the product of sound business judgment of the directors.


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