Abbey Spanier LLP has filed a class action suit against the beleaguered dance music company.
Robert Sillerman's plan to buy back the company he floated in 2013 fell through last month. The company's share price then crashed to US$0.45 per share on September 10th, having peaked at US$11.59 in December of 2013. Now, US law firm Abbey Spanier LLP, which specialises in class action lawsuits, has filed against SFX on behalf of anyone who invested in the company between February 25th and August 17th of 2015. Abbey Spanier claim Sillerman made "materially false and misleading statements" in his bid to buy back SFX.
"Sillerman repeatedly affirmed his commitment to acquire SFX," say Abbey Spanier lawyers. "However, he knew or recklessly disregarded and failed to disclose that he did not have any financing in place at the time he made his proposal, and knew or recklessly disregarded that he could not obtain the financing to consummate the transaction." They add: "Given the company's growing debt and decreasing margins it was not feasible that Sillerman was ever going to buy the company and, with the aid of the other defendants, Sillerman initiated and maintained a sham process designed to lure third party offers, in an attempt to shed his failing investment before the truth about the deterioration of the company could no longer be concealed."
As yet it's unclear how many—if any—SFX investors have joined Abbey Spanier, and it remains to be seen if the courts will accept it as a class action lawsuit. SFX owns Beatport and several other dance music-focused companies including React Presents, Made Event and i-Motion.