A Live Nation Entertainment shareholder has sued the company as well as the individual members of its board of directors over clams that the ticket and concert promotion giant intentionally misled them and failed to disclose anticompetitive practices.
Mark Zwick, who claimed to be a current investor in Live Nation, filed a suit in federal court in California on Friday, bringing forward similar allegations as were included in a separate class action lawsuit filed in federal court three months ago.
The new suit referenced the previous class action as well as several of the same developments that led to the filing in August. Like in the prior case, Zwick referenced the New York Times’ initial report about the Department of Justice’s investigation into the company, and the subsequent 7.8 percent drop in Live Nation’s stock to $66.21 after the report was published.
It further referenced the Senate Judiciary Subcommittee’s call for the DOJ to continue its investigation after the committee scrutinized Live Nation during a hearing in January, which the suit said caused a 10 percent drop to $68.78. The suit further referenced a Politico report claiming that the investigation could result in a lawsuit by the end of the year, which allegedly caused another 7.8 percent drop to $89.33.
During that time, the company and its board mislead investors because it failed to disclose that “Live Nation engaged in anticompetitive conduct including entering into extended restrictive contracts with artists and venues, charging high fees for its ticketing services, and retaliating against venues for working with alternative promoters or ticketing services,” the suit alleged, further adding that the company didn’t disclose that such alleged behavior made it “reasonably likely to face regulatory scrutiny, fines, penalties, and reputational harm.”
The new suit listed the company as well as Michael Rapino and the rest of Live Nation’s board of directors including chairman Greg Maffei, Klutch Sports Group founder Rich Paul, and Interscope Records and Beats Headphones co-founder Jimmy Iovine. The counts listed in the suit are violations of the Exchange Act, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, abuse of control, and gross management. The plaintiff asked for unspecified damages to be determined by the court.
A rep for Live Nation didn’t immediately respond to Rolling Stone‘s request for comment.
“The Individual Defendants engaged in a sustained and systematic failure to properly exercise their fiduciary duties. Among other things, the Individual Defendants breached their fiduciary duties of loyalty and good faith by allowing or permitting false and misleading statements to be disseminated in the Company’s SEC filings and other disclosures,” the suit said, further alleging that the defendants either “benefitted financially from the improper conduct, or received bonuses, stock options, or similar compensation from Live Nation.”
The suit comes at a time of increased scrutiny toward Live Nation Entertainment. Fans have voiced frustration for years over higher prices as well as increased fees on tickets. Swifties in particular pushed the conversation back into a major talking point after widespread complaints following the infamous on-sale for the singer’s record-breaking Eras Tour. Other promoters and ticketing companies have said that Live Nation’s outsized power in the business has made it too difficult for them to compete.
Live Nation itself has consistently denied that it engages in anticompetitive practices, noting that artists set their prices on Ticketmaster, and that the concert venues the company partners with help determine the fees and collect much of that revenue. It pointed to bots as a major source of technical issues on the Eras Tour, though even with a smoother on-sale, thousands of fans still likely would have been left without tickets given the huge demand and comparable lack of seats at each venue.
While pressure has mounted, the company has pushed lawmakers to pass legislation focused on empowering artists and reigning in scalpers on the resale market.