New York Attorney General Letitia James obtained $30.5 million from the Columbia Broadcasting Station (CBS) and former CBS Chief Executive Officer Leslie Moonves for hiding sexual assault allegations against himself, misleading investors about those allegations, and insider trading.
An investigation from the Attorney General’s office found that CBS and its senior leadership knew about multiple allegations of sexual assault made against Mr. Moonves and allegedly concealed those allegations from regulators, shareholders, and the public for months. The investigation also revealed that another senior executive at CBS allegedly knew about the allegations and sold millions of dollars of CBS stock in the weeks before the allegations became public.
“As a publicly traded company, CBS failed its most basic duty to be honest and transparent with the public and investors,” Attorney General James said. “CBS and Leslie Moonves’ attempts to silence victims, lie to the public, and mislead investors can only be described as reprehensible.”
The investigation also found that, on the same day an individual filed a confidential criminal sexual assault complaint against Mr. Moonves at a Los Angeles Police Department (LAPD) station in Hollywood, an LAPD captain informed a CBS executive of the complaint. Additionally, over the course of several months, the captain continued to provide Mr. Moonves and CBS executives with updates on the LAPD’s investigation.
While CBS allegedly tried to hide these allegations, the company authorized its former chief communications officer, Gil Schwartz, who was one of the few people with information about the allegations and the LAPD police report, to sell his shares. Mr. Schwartz sold 160,709 shares of CBS stock six weeks prior to the first article about the allegations becoming public. Schwartz’s shares had an average weighted price of $55.08 for a total of $8,851,852. The OAG says this persistent and illegal conduct violated New York’s Martin Act as well as other investor protection laws.
“After trying to bury the truth to protect their fortunes, today CBS and Leslie Moonves are paying millions of dollars for their wrongdoing,” Attorney General James said.
The actions of the CBS and Mr. Moonves constituted insider trading and violated New York’s investor protection laws. This results in a $30.5 million payment, the majority of which will be returned to CBS shareholders. CBS is also required to reform its human resources practices pertaining to sexual harassment. Additionally, Mr. Moonves must obtain written approval from the Attorney General’s office before accepting an executive or officer position at a public company doing business in New York for the next five years.
The agreement also requires CBS to follow its obligations under the OAG’s Civil Rights Bureau’s agreement, which requires CBS to conduct annual employee surveys about the work climate within CBS, submit its sexual harassment training to OAG for review, enhance its outreach and recruitment efforts to hire more women at all levels of management, and financially commit to fund human resources reforms within CBS.