A World Wrestling Entertainment Inc. shareholder sued chairman Vince McMahon and other members of its board in Delaware, claiming company leaders sold more than $300 million worth of stock at inflated prices while keeping the public in the dark about the collapse of key Middle East broadcasting deals.
The lawsuit, made public Tuesday, accuses WWE’s executives of telling investors for months it was poised to renew an agreement with Riyadh-based Orbit Showcase Network, which it knew to be exiting sports broadcasting altogether, then misleading them about its chances of finding a replacement deal.
Meanwhile, McMahon—the company’s co-founder and controlling stockholder—allegedly sold 3.5 million shares worth more than $280 million based on “nonpublic information regarding the company’s key contracts, business metrics, and financial prospects” in the increasingly “critical” Middle East region.
Other executives sold stock worth $30 million based on the same inside information, according to the complaint filed in Delaware Chancery Court. Among the board members named as defendants are McMahon’s daughter Stephanie and her husband Paul Levesque, a longtime wrestler known as “Triple H.”
When the truth about WWE’s “rapidly deteriorating” Middle East business finally emerged in early 2020, the company’s stock price fell from more than $62 a share to $44.50, according to the complaint.
WWE didn’t immediately respond to a request for comment Wednesday.
The partly redacted 68-page complaint echoes a securities fraud class action that settled for $39 million in December. McMahon and the board are to blame for that hit to the company’s finances and for damage to its business reputation, the suit says.
It was originally filed under seal June 10.
Cause of Action: Breach of fiduciary duty; unjust enrichment; aiding and abetting.
Relief: Punitive and actual damages, costs, and fees.
Attorneys: The plaintiff is represented by Rigrodsky Law PA and Joshua H. Grabar of Philadelphia.
The case is Dastgir v. McMahon, Del. Ch., No. 2021-0513, complaint unsealed 6/15/21.
To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com
To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com
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