Helios and Matheson Analytics, the corporation behind the subscription-based movie ticket company MoviePass, is under investigation by the office of the N.Y. Attorney General for supposedly misrepresenting its investors about MoviePass’ financial status.

The movie subscription service exploded in popularity last year when it began luring customers with the ability to watch one move-per-day at theaters as they wanted for, only $10 per month. MoviePass initially had about 3 million customers. However, the company has now altered its subscription plans and pricing as well as the how many movies and which movies it makes available to its customers.

On Wednesday, October 17^th, 2018, news came out that the State is looking into whether Helios and Matheson mispresented the company’s investors’ finances. The investigation is steered under New York’s Martin Act, an anti-fraud and investor protection law. The Martin Act allows the New York Attorney General to investigate a company for any potentially bad faith practice. Furthermore, any activity that can be seen as misleading or false promise-making to investors may provide grounds for an investigation. New York’s Attorney, General Barbara Underwood, is looking to find whether Helios and Matheson violated the Martin Act. The state of New York is not required to prove active intent or knowledge of fraudulent activity on behalf of the company in order to establish a conviction. Whether or not Helios and Matheson intentionally mislead investors, the company can be found guilty of securities fraud if the state finds considerable evidence for inadequate financial culpability and lucidity.

In October 2017, Helios and Matheson stock was trading at an all-time high of $39 per share. In July 2018, Helios and Matheson declared in an SEC filing that it had not made enough profits to pay its merchants resulting in severe subscriber service adjustments, including a limited movie selection, a significantly reduced monthly movie quota, and increased monthly prices. Today, Helios and Matheson’s stock trades for fractions of a cent. Helios and Matheson has denied any wrongdoing, and said it was cooperating with the New York State Attorney General.

It remains unclear what the Attorney General might find and MoviePass’ future holds.

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Sources:

https://www.forbes.com/sites/legalentertainment/2018/10/18/moviepass-under-investigation-for-fraud-and-misleading-investors/#63a91743783d

https://www.cnn.com/2018/10/17/media/moviepass-investigation-new-york-attorney-general/index.html

https://www.washingtonpost.com/news/arts-and-entertainment/wp/2018/08/01/the-rise-and-decline-of-moviepass-the-subscription-service-that-flew-too-close-to-the-sun/?utm_term=.25a3e522e332

https://variety.com/2017/film/news/moviepass-explainer-advantages-drawbacks-pros-cons-1202528720/

Image:

https://www.slashfilm.com/moviepass-probe/