TheCorporateCounsel.net

Some people have all the “fun.” Earlier this year, a character named Theodore (“Ted”) Farnsworth attempted to take control of a meme stock company by allegedly swiping its EDGAR codes and declaring himself co-CEO. That drama has continued through the summer, with more “Incorrect Disclosures” – an actual defined term in this Form 8-K – and ensuing litigation to get the “Farnsworth Group” to acknowledge their terminations as executives.

Yet, this nonsense is not Mr. Farnsworth’s first tangle with controversy. As the former CEO of Helios & Matheson Analytics – which owned MoviePass from 2017 and played a large role in transforming that company from an operating business into bankrupt meme fodder – he is nothing if not a “disrupter.” Yesterday, the SEC announced that it had filed a complaint against Farnsworth and Mitchell Lowe, the former CEO of MoviePass, for – among other things – violating Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of the Exchange Act. Here’s more detail from the press release:

According to the complaint, between August 2017 and at least March 2019, Farnsworth and Lowe intentionally and repeatedly made misstatements in HMNY Commission filings, press releases, and in the press that MoviePass could be profitable at its new, $9.95 per month subscription price; about HMNY’s purported data analytics capabilities; and concerning HMNY’s ability to fund MoviePass’s operations. As further alleged in the complaint, Farnsworth and Lowe also devised fraudulent tactics to prevent MoviePass’s subscribers from using the service. In addition, the complaint alleges that, between January and April 2018, Farnsworth and Lowe knowingly approved false invoices that Itum submitted to HMNY and MoviePass, disguising bonus payments as services purportedly provided by an entity Itum controlled.

This 2017 Bloomberg article details more of Farnsworth’s ventures & misadventures. And yes, I know it’s unlikely that the EDGAR codes were actually “burgled,” but I’m liking the sounds of that nickname for the movie that will be made about this. If only we could all get some sort of discounted pass to watch it in a theater.

– Liz Dunshee