Law Firm Announces Investigation of WWE On Behalf of Shareholders
The law firm Bronstein, Gewirtz, & Grossman officially announced this week that they were launching an investigation into whether
The law firm Bronstein, Gewirtz, & Grossman officially announced this week that they were launching an investigation into whether ” WWE and/or the company’s officers and directors violated the securities laws or breached their fiduciary duties in connection with the above-alleged misconduct.”
According to the official press release: “On June 15, 2022, The Wall Street Journal published an article entitled “WWE Board Probes Secret $3 Million Hush Pact by CEO Vince McMahon, Sources Say” which revealed that “[t]he board of World Wrestling Entertainment Inc.  is investigating a secret $3 million settlement that longtime chief executive Vince McMahon agreed to pay to a departing employee with whom he allegedly had an affair, according to documents and people familiar with the board inquiry.” The article further revealed, among other things, that “[t]he board’s investigation, which began in April, has unearthed other, older nondisclosure agreements involving claims by former female WWE employees of misconduct by Mr. McMahon and one of his top executives, John Laurinaitis, the head of talent relations at WWE, the people said.” On this news, WWE’s stock price fell $2.31 per share, or 3.4%, to close at $64.87 per share on June 16, 2022. On July 22, 2022, Vince McMahon announced his retirement from WWE. Then, on July 25, 2022, WWE filed with the U.S. Securities and Exchange Commission a current report on Form 8-K which announced, among other things, that “[t]he Company has made a preliminary determination that certain payments that Vince McMahon agreed to make during the period from 2006 through 2022 (including amounts paid and payable in the future), and that were not recorded in the WWE consolidated financial statements, should have been recorded as expenses in the quarters in which those agreements were made (the ‘Unrecorded Expenses’)[,]” which “[a]s of the date hereof, the Company has identified Unrecorded Expenses totaling approximately $14.6 million.” The report further announced that “the Company currently anticipates that it will revise its previously issued financial statements to record the Unrecorded Expenses in the applicable periods for the years ended December 31, 2019, 2020 and 2021, as well as the first quarter of 2022[.]” Finally the report also announced that “[t]he Company has also received, and may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas or demands arising from, related to, or in connection with these matters.”
This becomes the latest legal issue for WWE and McMahon, as Detroit’s Police and Fire Retirement System filed a lawsuit against McMahon earlier this year.