Ahead of the official relaunch of subscription-based movie ticketing service MoviePass, the Securities and Exchange Commission (SEC) filed a complaint against three of its former executives, claiming they lied to investors and the public.
The SEC filing targeted former MoviePass CEO Mitch Lowe and Ted Farnsworth, the former CEO of parent company Helios and Matheson Analytics (HMNY), claiming they lied about how it planned to be profitable and used “fraudulent tactics to prevent MoviePass’s heavy users from using the [unlimited subscription service],” the SEC wrote.
Chris Bond, a spokesperson for Farnsworth, sent this statement to TechCrunch: “The complaint concerns matters subject to an investigation that the company and other news outlets publicly disclosed nearly three years ago, and Mr. Farnsworth’s legal team will maintain the challenge to this complaint. Mr. Farnsworth continues to maintain that he has always acted in good faith in the best interests of his companies and shareholders.”
Kobre & Kim, LLP representing Lowe, said in a statement, “We disagree with the SEC’s characterization of Mitch’s conduct, including allegations about statements made about the progress in building MoviePass. Bringing new commercial concepts to the market can be disruptive and uneven. Mitch remains proud of what was accomplished at MoviePass and intends to work within the legal process to resolve these allegations.”
When under the rule of Lowe and Farnsworth, MoviePass promised users a $9.95 per month subscription that would give them an unlimited number of 2D movie tickets. However, MoviePass quickly kissed “unlimited” goodbye, ending the service that was likely losing a lot of money. The company filed for bankruptcy in 2020.
Last year, Farnsworth and Lowe settled with the Federal Trade Commission after MoviePass was accused of preventing users from using the subscription service they were paying for.
The original founder and owner of MoviePass, Stacy Spikes, hopefully won’t repeat the mistakes of its previous owners. Spikes is launching an updated version of MoviePass, which is currently beta testing in three markets: Chicago, Kansas City, and Dallas. However, there will be no such thing as unlimited viewing, and instead MoviePass will have three subscription price tiers with set limits ranging from $10, $20, and $30 per month.
Updated 9/28/22 at 9:34 a.m. ET with statement from a spokesperson for Farnsworth and Lowe.