Go-Video Stock Falls 14 Percent After Lawsuit
SCOTTSDALE, Ariz. (AP) _ Go-Video Inc.‘s stock price fell 14 percent Monday following reports of a shareholders’ lawsuit accusing officials of the videocassette recorder company with recklessly spending corporate funds.
Go-Video stock closed at $3 Monday in over-the-counter trading, down 50 cents from Friday’s close. The company markets dual-deck VCR’s made for it by a Korean company.
The lawsuit, filed Wednesday in U.S. District Court in Phoenix, alleges that management misrepresented the company’s financial prospects to shareholders.
The lawsuit accuses management of squandering the company’s assets by buying stock in another company, by authorizing stock options to people who provided the company services and patents and by making a $140,000 loan to a director.
Go-Video, in a statement Friday, said the suit concerned business decisions that had been reported in company filings and which in some cases were approved by shareholders. The suit, it said, is ″riddled with errors″ and lacks merit.
The suit, which seeks class-action status, was filed by Bernard Paluch, Jeanne Thompkins, First Video Service Corp. and Normand Family L.P. The plaintiffs didn’t disclose the size of their investments in Go Video.