Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Entertainment Law & FinanceKickerFeaturesTopicsLitigationTechnology Media and TelecomSectionsNewsLJN Newsletters

NY Court Rules Film Securities Suit Against Paramount Lacks Viable Claim

By Stan Soocher
April 29, 2010

The U.S. District Court for the Southern District of New York dismissed a securities suit brought by several investing financial institutions against Paramount Pictures. Allianz Risk Transfer v. Paramount Pictures Corp., 08 Civ. 10420(TPG). The Allianz plaintiffs paid about $231.3 million for securities in Melrose Investors LLC, through which Paramount procured funds to produce and distribute movies between 2004 and 2006. The plaintiffs alleged that statements in the Melrose private placement memorandum (PPM) were incomplete, false and misleading ' including that Paramount planned to use pre-sales to foreign distributors to lower cost and risk, although the studio had already decided its affiliated United International Pictures would handle foreign distribution. The complaint causes of action included for violation of '10(b) of the Securities Exchange Act of 1934 and of U.S. Securities and Exchange Commission Rule 10b-5.

Granting Paramount's motion to dismiss for failure to state a claim, U.S. District Judge Thomas P. Griesa noted, among other things, that “the actual decline in Paramount's use of international pre-sales was insufficient to find in any of Paramount's statements a material misstatement or the omission of a material fact, as required to state a claim under the federal securities laws. According to the amended complaint, 25% of the cost of films comparable to the Melrose Slate films and released by Paramount between 1998 and 2003 was financed by international pre-sales, as opposed to 12.5% of the cost of the Melrose Slate films. This does amount to a reduction. However, it is difficult to say that Paramount was no longer engaging in the practice on an 'opportunistic' or 'selective basis,' which is all the PPM claims.”

This premium content is locked for LJN Newsletters subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

The DOJ's New Parameters for Evaluating Corporate Compliance Programs Image

The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.

Use of Deferred Prosecution Agreements In White Collar Investigations Image

This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.

Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

Compliance Officers: Recent Regulatory Guidance and Enforcement Actions and Mitigating the Risk of Personal Liability Image

This article explores legal developments over the past year that may impact compliance officer personal liability.