The entertainment company SFX, which made substantial moves last year including an IPO, is currently in the process of being sued by three music managers for defrauding them out of stock. The value of the stock lost by the managers is valued at over $100 million, so you could see why this is going to the courts so publicly.
The plaintiffs, Paolo Moreno, Gabriel Moreno and Lawrence Vavra claim that they pitched the idea to consolidate various music festivals and promoters into the newer SFX company, which was founded by Robert F.X. Sillerman. The relationship and execution of restarting SFX was supposed to warrant serious equity and ownership to the three individuals, however that did not happen. Aside from that, a promise of 2.5 million “founders shares” were supposed to be handed out, but that did not happen either.
During the course of the last year, the three men worked for the billion dollar company SFX and they say that a formal deal was in the works, but Robert Sillerman never made any official documents, except for some draft employment agreements, whose details were not the same as what was verbally agreed upon.
To further complicate things, the claim was made by the managers that Sillerman lied to them about a stock split, which resulted in a substantial decrease in the three men’s ownership of the company.
SFX Spokesperson, Ed Tagliaferri and Vice Chairman Sheldon Finkel both are defending against the claims, which they say are “baseless.” Given SFX’s falling stock (lost over 8% today as a result of the story breaking), I don’t think they want to have this on their plate at the moment. It will be interesting to see how this pans out because it could play a major role within EDM culture. For more information and details on the case, head over to the sourced link below from The Wall Street Journal.
Source: Wall Street Journal