It has been reported that SFX Entertainment, owners of Beatport, are being sued by investors. A class action lawsuit has been filed against the company amid allegations that its largest shareholder, Robert F.X Sillerman, mislead third party investors that he possessed the financial backing to acquire it. As reported by PR Newswire, “defendants made materially false and misleading statements in connection with the proposed acquisition of SFX by Robert F.X. Sillerman, SFX’s Chief Executive Officer, and largest shareholder, for all of the outstanding common stock he did not already own.
“The complaint alleges that throughout the class period [the time in which the alleged unlawful act occured], defendant Sillerman repeatedly affirmed his commitment to acquire SFX. However, defendant Sillerman knew or recklessly disregarded and failed to disclose that he did not have any financing in place at the time he made his proposal and knew or recklessly disregarded that he could not obtain the financing to consummate the transaction.”
The team behind the lawsuit on behalf of the investors, Abbey Spanier LLP, also claims Sillerman “initiated and maintained a sham process designed to lure third party offers”.