Alongside all the intelligence at their disposal, human beings also have a pretty dismal record at not making mistakes. This dynamic has already been reinforced quite a few times throughout our history, with each testimony practically forcing us to look for a defensive cover. To the world’s credit, we’ll solve our conundrum in the best possible way once we bring dedicated regulatory bodies into the fold. Having a well-defined authority across each and every area was a game-changer, as it instantly concealed our many shortcomings. Nevertheless, the caveat that emerged here was how quickly the whole utopia just dissipated into thin air. Talk about what caused it, the blood is very much on technology’s hands, considering the moment its layered nature took over the scene; it ended up creating a reality where everyone had a shot at exploiting others for their own benefit. In case that didn’t sound bad enough, the stated runner eventually started to materialize on a massive scale, therefore leaving our governing forces expectantly overwhelmed. After spending a long time in the middle of nowhere, though, it seems like the regulatory contingent is ready to put-together a comeback. If anything, the traces of it have only turned more and more evident over the recent past, and a new lawsuit should do a lot to solidify them further.
As we gear up for the renaissance of subscription-based movie ticketing service, MoviePass, the Securities and Exchange Commission of the US has formally filed a lawsuit against company’s former executives in relation to a possibility of misleading practices on their part. According to certain reports, Former MoviePass CEO, J. Mitchell Lowe, and Theodore Farnsworth, former CEO of majority stakeholder, Helios and Matheson Analytics Inc., lied to the public and regulators about the service’s economic health. Then, to keep heavy users from exposing its unsustainable business model, MoviePass would unfairly cap out their usage by claiming that the stated users have violated the company’s security policy,
“Faced with debilitating negative cash flows — rather than tell the public the truth — Farnsworth and Lowe devised fraudulent tactics to prevent MoviePass’s heavy users from using the service, and falsely and misleadingly informed the public that usage had declined naturally,” the complaint said.
To contextualize these allegations, we must look at the time when MoviePass promised users a $9.95 per month subscription, which interestingly enough, would give them an unlimited number of 2D movie tickets. Now, while this led to an unsurprising expansion of its user base, the growth turned out to be pretty artificial. Soon, MoviePass removed the unlimited bit from their offer, but it was too late by then, as the company was forced to file for bankruptcy in 2020.
Apart from it, the lawsuit also digs into a dynamic, which saw Farnsworth and Lowe signing off on fake invoices from MoviePass’ executive vice president, Khalid Itum, a move that ended up giving Itum $310,000 under false pretenses.
Currently, SEC is seeking monetary damages from the defendants, along with unequivocal ban on Lowe and Farnsworth from serving as officers or directors of any company with registered securities.