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Hagens Berman announced an investigation of Netflix regarding claims made in a recently filed securities class-action lawsuit, including alleged insider selling by corporate executives, and informed investors of a March 13, 2012, deadline to move for lead plaintiff.
Investors who purchased shares of Netflix common stock between December 20, 2010, and October 24, 2011 (the “class period”), and have lost more than $500,000 are encouraged to contact Partner Reed R. Kathrein. Kathrein is leading Hagens Berman’s investigation.
The securities class-action lawsuit was filed in the United States District Court for the Northern District of California on January 13, 2012. The complaint alleges that Netflix violated federal securities laws by making false and misleading statements to investors during the class period.
Specifically, the lawsuit claims that Netflix knew its short-term contracts with content providers were likely to expire or be so costly to renew that the company would be forced to raise its prices, but failed to timely disclose these details to investors. On July 12, 2011, Netflix announced that it was raising prices for some subscribers, and on July 13, 2011, the company announced a new multi-year agreement with NBC Universal.
Following the news, Netflix stock closed at $298.73 per share. The company then announced on Sept 15, 2011, that it was updating its third quarter 2011 guidance, disclosing that it had lost a million subscribers following the price increases. On this news, Netflix stock price declined by nearly 19 percent, closing at less than $170 per share.
On October 24, 2011, the company disclosed to shareholders a net loss of more than 800,000 subscribers. Netflix stock fell again, closing at $80.86 on Oct. 27, 2011. According to the class-action complaint, Netflix executives sold over $90 million worth of the company’s stock during the class period. The lawsuit alleges that CEO Reed Hastings sold 190,000 shares for $43.2 million. The deadline to move the court for lead plaintiff status is March 13, 2012.
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