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By Variety

A CBS shareholder lawsuit filed in August has been amended to accuse former CBS chairman-CEO Leslie Moonves and three other insiders of making suspect stock sales because they knew the sexual misconduct scandal that toppled Moonves was about to break.

The class-action complaint, filed in New York federal court, claims Moonves, acting CEO Joe Ianniello, CBS' China operations chief Lawrence Liding and former communications head Gil Schwartz collectively sold 3.4 million shares between January 2017 and June 2018 that brought in more than $201 million.

The initial complaint faulted the CBS board of directors and others for failing to police the working environment at CBS and for not taking action when it became apparent that the Moonves scandal was about to damage CBS' stock price. The amendment details the stock transactions for the four executives over the 18-month period.

"Taken collectively, these insider sales ... were timed to capitalize on CBS's inflated stock price before defendant Moonves's misconduct and the pervasive sexual harassment that permeated the Company was revealed to the market," the complaint states.

Sources close to the situation noted that some of the sales made by the four executives may have been made under the governance of a Securities and Exchange Commission rule known as 10b5-1 that sets out a regular schedule of stock sales for company insiders who hold significant shares and options. Under those plans, insiders give up direct control of sales or purchases of company shares in order to avoid the liability of insider trading claims.

A spokesman for Moonves said the executive "denies any wrongdoing." SEC filings show that Moonves' sales in January 2018, for example, were made under a Rule 10b5-1 plan. Moonves' largest stock sale during the period in question -- involving 200,000 shares in June 2017 -- were also made under a 10b5-1 plan.

CBS in a statement said that stock sales by company insiders are governed by the company's disclosure policies.

"CBS has in place clear policies and procedures relating to CBS stock sales by senior executives of the company," CBS said in a statement. "Executives who possess material information about CBS that has not been made public may not use that information in selling CBS stock. The vast majority of sales mentioned in this complaint were made as part of pre-planned selling arrangements designed to comply with applicable securities laws. The remaining sales were subject to CBS' customary pre-clearance policies and procedures and were properly disclosed. While it would not be appropriate to comment on ongoing litigation, we believe that our policies and procedures are fully in compliance with law."

Moonves' rep asserted that "the stock sales in question were made in accordance with an approved SEC Rule 10b5-1 stock sale plan." The bulk of Ianniello's sales were also under a 10b5-1 plan.

Schwartz's sales may have been influenced by the timing of his retirement, on Nov. 1, 2018, after more than 20 years as CBS' top communications exec. He earned a total of $15.1 million from stock sales during the period, capped by the sale of 160,709 shares for $8.8 million on June 14, 2018, that do not appear to be governed by a 10b5-1 plan. Schwartz declined to comment.

Moonves made $155.3 million on stock sales during the period. Ianniello, who was COO to Moonves before being named acting CEO in September after Moonves' ouster, earned $28.8 million. Liding, who served as CBS' controller and chief accounting officer during the period in question, took in $2.3 million.

The complaint asserts that the four executives dumped stock on the "unsuspecting investing public while in possession of material non-public information, thereby profiting from their failure to disclose the truth to the market."

The Construction Laborers Pension Trust of Southern California is the lead plaintiff in the case.