It was a very unsettling lunch hour for CBS Corporation shareholders, and the next week likely won’t be any more pleasant. Just before Noon Eastern, it became known that The New Yorker will publish an article that includes sexual misconduct allegations against CBS CEO Les Moonves.
CBS’s independent directors responded by saying they are “committed to investigating claims that violate the company’s clear policies.”
Within 75 minutes, CBS shares sank to $53.21, as news of a probe rattled investors.
Volume exploded, reaching 13.8 million shares at the Closing Bell on Friday. Average volume is 3.3 million shares.
When the day was done, CBS was off 6%, to $54.08, wiping out a rally from $49.98 started on June 1 that culminated with the July 11 close of CBS shares at $59.30.
With news flying across the business journals and mainstream press, Kehoe Law Firm of Philadelphia announced an investigation of whether there are potential securities claims on behalf of CBS Corporation investors and/or possible breaches of fiduciary duties by officers and directors of CBS.
But, it is the alleged conduct of Moonves that has Wall Street, and America, talking.
The New Yorker article will discuss “allegations of instances of unwanted kissing and touching over two decades ago.”
Thus, events that may or may not be true that happened during the Clinton Administration can nevertheless bring great negative impact to one of the biggest companies in the U.S.
CBS’ independent directors are very concerned.
“All allegations of personal misconduct are to be taken seriously,” they said in a statement. The Independent Directors of CBS have committed to investigating claims that violate the company’s clear policies in that regard. Upon the conclusion of that investigation, which involves recently reported allegations that go back several decades, the board will promptly review the findings and take appropriate action.”
That said, the timing of the allegations couldn’t come at a worse time for CBS, which is still battling controlling shareholder National Amusements Inc. and the Redstone family over CBS’s contention that it is forcing its hand on a reunification of CBS and Viacom.
“The timing of this report comes in the midst of the company’s very public legal dispute,” the independent directors state. “While that litigation process continues, the CBS management team has the full support of the independent board members. Along with that team, we will continue to focus on creating value for our share owners.”
CBS’s 1-year target estimate is $66.33.
That price hasn’t been seen for CBS shares since prior to Labor Day 2017.