Black Widow
06-20-2009, 05:00 PM
What started out as a typical wrestling publicity joke could have serious implications for two companies.
World Wrestling Entertainment, Inc. (WWE: 12.43, -0.4, -3.12%) and General Electric Company (GE: 12.09, 0.1, 0.83%) could be liable for a violation of securities law, after GE-owned USA Network issued a fake press release that may have caused shares of WWE to fall 6%, Tuesday afternoon.
The release announced the sale of WWE’s popular Monday Night RAW wrestling show, which airs on the USA Network, to billionaire investor Donald Trump. The details of the sale were not provided and the release claimed, “the terms of the deal were not disclosed.” However, WWE Chairman Vince McMahon was quoted as stating, “this was an offer I couldn’t refuse.”
In the release, Trump revealed that in his first act as new owner, he planned to air the show live and commercial free on Monday, June 22, and he would be making a live appearance on the program as the new owner.
The release was distributed by the GE-owned USA Network via PR Newswire, a business and corporate-relations newswire service. Upon circulation of the release, shares of WWE, a publicly traded company, fell more than 7%, to $12.18 per share, after opening at $13.13, Tuesday morning.
But the sale of the franchise to Donald Trump never actually happened. Two days later came a second announcement, saying the original release “referred to Monday Night RAW’s storyline of a ‘sale’ of WWE’s RAW to Donald Trump.” However, the release said, the companies “intended the release to be promotional for that ongoing story arc on the series. There is no such actual 'sale.' We apologize for any confusion.”
Meissner agrees there is not much risk of an SEC investigation, since it doesn’t appear the company intended to manipulate the stock price, but Randy Katz a securities lawyer with Baker & Hostetler LLP in Orange County, Calif., thinks the SEC might consider opening an investigation.
"It certainly is a possibility," Katz said. "The world today versus a couple of years ago has less tolerance for these types of issues. Theres a greater likelihood today, than if this happened a few years ago."
Both attorneys think WWE investors that sold the stock at a loss could have legal grounds to collect damages, potentially from both WWE and GE, since USA Network issued the release, but he couldn’t think of any legal precedent that could be used.
“Off top of my head, this is a unique set of facts,” Meissner said. “It sounds like poor judgment on their part for them to do this—for either company of that size to undertake something like this…it seems silly.”
USA Network did not return calls for comment.
FOXBusiness
World Wrestling Entertainment, Inc. (WWE: 12.43, -0.4, -3.12%) and General Electric Company (GE: 12.09, 0.1, 0.83%) could be liable for a violation of securities law, after GE-owned USA Network issued a fake press release that may have caused shares of WWE to fall 6%, Tuesday afternoon.
The release announced the sale of WWE’s popular Monday Night RAW wrestling show, which airs on the USA Network, to billionaire investor Donald Trump. The details of the sale were not provided and the release claimed, “the terms of the deal were not disclosed.” However, WWE Chairman Vince McMahon was quoted as stating, “this was an offer I couldn’t refuse.”
In the release, Trump revealed that in his first act as new owner, he planned to air the show live and commercial free on Monday, June 22, and he would be making a live appearance on the program as the new owner.
The release was distributed by the GE-owned USA Network via PR Newswire, a business and corporate-relations newswire service. Upon circulation of the release, shares of WWE, a publicly traded company, fell more than 7%, to $12.18 per share, after opening at $13.13, Tuesday morning.
But the sale of the franchise to Donald Trump never actually happened. Two days later came a second announcement, saying the original release “referred to Monday Night RAW’s storyline of a ‘sale’ of WWE’s RAW to Donald Trump.” However, the release said, the companies “intended the release to be promotional for that ongoing story arc on the series. There is no such actual 'sale.' We apologize for any confusion.”
Meissner agrees there is not much risk of an SEC investigation, since it doesn’t appear the company intended to manipulate the stock price, but Randy Katz a securities lawyer with Baker & Hostetler LLP in Orange County, Calif., thinks the SEC might consider opening an investigation.
"It certainly is a possibility," Katz said. "The world today versus a couple of years ago has less tolerance for these types of issues. Theres a greater likelihood today, than if this happened a few years ago."
Both attorneys think WWE investors that sold the stock at a loss could have legal grounds to collect damages, potentially from both WWE and GE, since USA Network issued the release, but he couldn’t think of any legal precedent that could be used.
“Off top of my head, this is a unique set of facts,” Meissner said. “It sounds like poor judgment on their part for them to do this—for either company of that size to undertake something like this…it seems silly.”
USA Network did not return calls for comment.
FOXBusiness