Warren City Police & Fire Retirement System, Michigan, is suing World Wrestling Entertainment Inc. claiming the company failed to disclose information about its troubled business dealings with the Saudi government.
The class-action lawsuit, filed March 7 in U.S. District Court in New York, alleges that company executives deceived the investing public regarding WWE's business and artificially inflated the WWE stock. Certain senior executives of WWE sold more than $282 million worth of their personally held shares at "fraud-inflated prices," the lawsuit said.
Stamford, Conn.-based WWE has held several shows in Saudi Arabia in recent years. It has entered into a multiyear television distribution rights agreement with the Orbit Showcase Network, a Saudi-controlled direct broadcast satellite provider, and a 10-year partnership with the Saudi General Sports Authority to host live events in Saudi Arabia, according to the lawsuit.
WWE did not disclose that negotiations over a renewed broadcasting distribution deal with the Saudi government had broken down and that OSN had terminated the broadcast of WWE programming in the first quarter of 2019, despite a contractual obligation to continue such broadcasts, among other concerns, the lawsuit said.
The lawsuit also claims WWE did not have the ability to expand its operations in the Middle East or within Saudi Arabia as had been represented to investors.
On Jan. 30, WWE revealed that two of its longest serving senior executives — defendants George A. Barrios and Michelle D. Wilson, both of whom had been co-presidents of the company — had been ousted. Shortly thereafter, on Feb. 6, WWE again disclosed disappointing financial performance due to its failure to secure a favorable broadcasting deal with the Saudis and revealed that the Saudi media rights deal would not be included in the company's financial forecasting, according to a news release from law firm Robbins Geller Rudman & Dowd, which is representing the plaintiffs.
As a result of these disclosures, the price of WWE Class A common stock went as low as $40.24 on Feb. 6, down from a class period — which started on Feb. 7, 2019 — high closing of $96.71 in April 2019, the lawsuit said.
In an email Monday, a WWE spokesman said: "Although WWE has not been served, the company's outside counsel Jerry McDevitt of K&L Gates has reviewed the complaint, which is based on false and incorrect gossip from unnamed sources, and we will move to dismiss the case as it is meritless."
A representative from the pension fund, which had $300 million in assets as of Dec. 31, 2017, the most recent data available, could not immediately be reached for comment to provide further information.