Class action claims Redstone inflated CBSTue Oct 06, 2009 @ 10:07AM PST
By Eriq Gardner
But a new class action filed in New York federal court against CBS and members of its corporate board caught our attention.
Lead plaintiff Curt Hatcher is claiming that CBS cooked its books in order to help topper Sumner Redstone avoid payments on a loan. Allegedly, Redstone borrowed $1.6 billion with the contingency that he'd make multimillion-dollar payments on the loan if CBS stock fell below a certain price. To avoid that outcome, in 2008 CBS purportedly ignored drops in goodwill assets like FCC licenses when calculating its assets, inflated its worth by $14 billion and touted its "strong" and "pristine" balance sheet.
Later that year, CBS announced a $14 billion write-down of goodwill and other assets hurt by the economic turmoil, sending shares of the stock down 20 percent.
Hatcher's lawsuit demands damages, restitution and an order requiring CBS to reform corporate governance and board oversight.