Advertising giant WPP Plc (WPPGY, WPP.L) has sued the digital ad firm Spot Runner Inc. for securities fraud and breach of contract, according to media reports.
The complaint claims that two company founders and other investors committed fraud by selling off $54 million worth of their holdings in the company without revealing the sales to investors, the report said.
WPP's suit names Spot Runner CEO Nick Grouf and co-founder David Waxman, as well as investors like Pilot Group's Bob Pittman, Index Ventures' Danny Rimer and Battery Ventures' Roger Lee. Peter Huie, Spot Runner's general counsel was also targeted too.
In a lawsuit filed in the U.S. District Court, Central District of California, WPP claims that rather than try to improve and build up the company, Spot Runner "perpetuated a 'pump-and-dump' scheme in which they aggressively promoted the company to new investors (often by promoting that WPP was an investor in and supporter of the company) and then sold new investors large quantities of their own secondary shares at ever-increasing valuations."
WPP is seeking at least $13 million plus attorneys' fees. Spot Runner has reportedly planned to defend itself vigorously against WPP's claims.
WPPGY closed Friday's trading session at $31.77, up 21 cents or 0.67%. In the after-hours session, the stock traded at $31.58, down 19 cents or 0.59%.
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