“Netflix succeeded in getting a shareholder lawsuit dismissed that had accused the company of inflating its share price by concealing rising costs, even as insiders like CEO Reed Hastings were selling millions of dollars in stock, reports Reuters.
The lawsuit was filed in January 2012 by shareholders led by the Arkansas Teacher Retirement System and State-Boston Retirement System, which claimed Netflix deceived them about its prospects. They also said Netflix misled shareholders by launching a stock buyback program, a sign that shares might be undervalued, even as Hastings and other insiders were selling off close to $85 million of their own shares. Hastings was also deemed not to have materially misled investors on a conference call on Dec. 8, 2012, when he said Netflix would benefit from a “virtuous cycle where it could add subscribers and streaming content while lessening the costs of its DVD-by-mail rental service….”
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