Netflix faces a class action lawsuit

ONLINE STREAMING SERVICE Netflix is facing a class action lawsuit from investors just one week after its launch in the UK and Ireland.

According to the Guardian, investors are claiming that Netflix management misled shareholders over the streaming company's deteriorating business, all the while, they claim, cashing in $90m in stock while the share price was at an all-time high.

The lawsuit, which was filed in California, accuses executives of issuing "materially false and misleading statements regarding the company's business practices and its contracts with content providers".

Netflix CEO Reed Hastings, finance director David Wells, chief content officer Ted Sarandos, chief product officer Neil Hunt and marketing director Leslie Kilgore are named in the lawsuit.

The complaint said, "Defendants' statements about Netflix's ability to secure content and maintain profit margins were crucial to investors' evaluation of Netflix.

"Rather than fully disclose the devastating cost increases which were then threatening Netflix's entire business, defendants talked about its ability to grow. Specifically, defendants concealed negative trends in Netflix's business."

The lawsuit was filed by the law firm Robbins Geller Rudman & Dowd on behalf of institutional investors at the City of Royal Oak Retirement System.

Last week Netflix launched its service in the UK and Ireland, offering early adopters a one month free trial.

We browsed the collection and weren't that impressed by the selection of titles. However, many media firms are still struggling to come to terms with web streaming and download services and are delaying new releases. µ