DreamWorks Insider Trading Scandal?Suspicious sales of DreamWorks Animation stock could be at the core of the Securities and Exchange Commission's look into the studio's dealings. Monday morning, in a planned conference call for investors, DreamWorks Animation officials conceded that the SEC had questions about the way the company's stock was traded. (DreamWorks recently spun off its animation company, thus creating stock and a public entity open to scrutiny not accorded the main company, which is privately held.) The company also announced that it had dropped plans to pursue a new stock offering to raise $500 million.

Officials also said that for the last eight weeks, they'd been conducting an analysis of their DVD sales. On the conference call, which is available on the Internet, DreamWorks Animation officials said that things were so bad that even if the company's planned fall release of "Wallace and Gromit" made a projected $170 million at the box office, it still wouldn't help the bottom line. But industry insiders apparently knew this was coming because of a class-action suit filed against DreamWorks on June 10, 2005.

The lawsuit named DreamWorks' Jeffrey Katzenberg ‹ who is not accused of profiting from stock sales ‹ as well as company officers Ann Daly and Kristina M. Leslie as defendants. Katzenberg is named because he is the head of the company.
The suit claims that the defendants "flooded the market" with DVDs of "Shrek 2" last fall, and followed the release with false claims of success, thus inflating the newly formed DreamWorks Animation company's stock price.
The suit alleges that the company's insiders knew this, and that when the "truth" was revealed on May 10 of this year, the stock price tumbled. By then, according to the suit, all the principals had cashed out and made handsome profits, leaving holders of the common stock to fend for themselves.
For some reason, just about no one covered this story in the mainstream business press or Hollywood trade publications. But the suit ‹ filed on behalf of the class by Milberg Weiss, the same law firm that represented Disney stockholders in the Mike Ovitz suit ‹ is eye-opening. It alleges what this column and just about any business analyst could confirm: that major sales of stock by DreamWorks insiders look timed to predate announcements of bad news and tumbling stock prices. This could be construed as insider trading, which is what the lawsuit suggests. But insider trading would have to be alleged either by stockholders who bought or sold stock on the same day as the principals, or by the SEC itself, says a well-placed source.
Publicly available records show that the company's two chief operating officers, defendants Daly and Leslie, as well as another officer, Katherine Kendrick (who is not a defendant), sold DreamWorks Animation stock totaling $4.5 million on April 27, 2005, when the stock price was at a high.
Two weeks later, after news that the sales of "Shrek 2" DVDs had not been as strong as promised, the stock began a downward slide. More surprising is a monumental sale of stock last November by Paul Allen , Microsoft co-founder and investor in DreamWorks from its inception in 1995.
Allen cashed in 4,901,858 shares of stock on Nov. 4, 2004 and pocketed an astounding $137,252,024. (The Milberg Weiss lawsuit claims Allen actually made almost $184 million that day.)
That was only a week after DreamWorks Animation had been spun off into a public entity, but around the time the "Shrek 2" DVD went on sale to much hoopla.
Allen, an outside director, is not named as a defendant in the class-action suit.
Also on Nov. 2, 2004, Lee Entertainment ‹ owned by the same Korean family that owns Samsung ‹ sold 775,213 shares of DreamWorks Animation stock and claimed $21,705,964.
When Allen and Lee sold in November, the stock was at $28. When the three officers took their money in April, the stock had gone up to $37.62.
But on Monday morning, DreamWorks Animation stock was selling at $23 a share.
Ironically, DreamWorks' live-action studio, run by David Geffen and not part of the class-action lawsuit, is on the verge of a big summer. On Sunday night, the studio premiered "The Island," directed by Michael Bay ("Armageddon," "Pearl Harbor"), starring Ewan McGregor and Scarlett Johansson (see above).
This fall it'll release what's said to be Woody Allen 's best movie in almost a decade, "Match Point."
And Steven Spielberg is now filming his movie about the 1972 Munich Olympics massacre and the Israeli assassinations of Palestinian terrorists that followed, due in time for Christmas.

"Life is sweet and small. The rest is just talking. Let everyone live."
Dimitris Ouzounidis
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Surely they're not saying that the company run by that "genius" director of the Tom Cruise starring megawatter, the guy who buddies with Bubba and goes to Cuba and smokes cigars with killer dictator Fidel Castro and talks about how cool it was, could have people at his company of bad moral character who would do illegal things? Surely not!

I mean, he's a genius! They're all geniuses!
The suit claims that the defendants "flooded the market" with DVDs of "Shrek 2" last fall, and followed the release with false claims of success, thus inflating the newly formed DreamWorks Animation company's stock price.

Sounds like they've taken a course in "Microsoft 101."

I wonder if this is why the VHS copies of "Shrek II" and "Shark Tale" were selling for $2.88 at Walmart.

RonB
"There's a story there...somewhere"
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Surely they're not saying that the company run by that "genius" director of the Tom Cruise starring megawatter, the guy ... cool it was, could have people at his company of bad moral character who would do illegal things? Surely not!

What? Did Tom Cruise step your dog, or something? Good grief, give the poor guy a break. Sure he's a hack, but it's not like he's Ben Affleck, or anything.
As for the management of Dreamworks... I think I'd rather they smoked cigars with Fidel Castro than do something really sleazy, like say... out a CIA agent.

RonB
"There's a story there...somewhere"
Surely they're not saying that the company run by that ... bad moral character who would do illegal things? Surely not!

What? Did Tom Cruise step your dog, or something? Good grief, give the poor guy a break. Sure he's a hack, but it's not like he's Ben Affleck, or anything.

Ah, but don't you see? He's a Scientologist, and that puts him beyond the pale for Skip.
FWIW I liked him a lot in WOTW, and Collateral. As an actor he's stretching, and playing beyond and against type, and doing pretty well.

Not as good as Travolta... another Scientologist... but at least he's trying.

"Life is sweet and small. The rest is just talking. Let everyone live."
Dimitris Ouzounidis
Surely they're not saying that the company run by that ... bad moral character who would do illegal things? Surely not!

What? Did Tom Cruise step your dog, or something? Good grief, give the poor guy a break. Sure he's a hack, but it's not like he's Ben Affleck, or anything.

Yeah, give him a break, right. $cientology *** kills people, and he's promoting it big time. Which suits me because he's really showing people how frigging loony it is.
As for the management of Dreamworks... I think I'd rather they smoked cigars with Fidel Castro than do something really sleazy, like say... out a CIA agent.

You really live in a head-up-butt world, don't you? Fidel Castro has killed thousand and thousands of people, people risk their lives through shark-filled waters every day, and it's just fine and dandy with you, right?
The utter stupidity and callousness of you armchair liberals is stunning. It amazes me you have the brainpower to even post.
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What? Did Tom Cruise step your dog, or something? Good ... hack, but it's not like he's Ben Affleck, or anything.

Ah, but don't you see? He's a Scientologist, and that puts him beyond the pale for Skip. FWIW I liked ... beyond and against type, and doing pretty well. Not as good as Travolta... another Scientologist... but at least he's trying.

Take a look at a few websites, if you have the guts -

http://www.xenu.net
http://www.lisamcpherson.com/
http://www.scientology-lies.com /
/
I had a girlfriend kill herself after $cientology "enlightenment."

I'm sure that doesn't matter to you. Who cares what evils get done via $cientology as long as you like Cruise and Travolta's acting, right? I mean, nothing matters as long as you're entertained, huh?

Grow a spine some time - it might help your posture.

www.scientologykills

I will not believe our labors are lost. I shall not die without a hope that light and liberty are on a steady advance.
Thomas Jefferson
Ah, but don't you see? He's a Scientologist, and that puts him beyond the pale for Skip.

I'm no huge fan of Tom Cruise, nor do I care for Scientology (and I'm sure Scientologists are not fans of Catholicism) but ultimately Cruise is just an actor. Judge him by his acting ability and forget about his personal life.
FWIW I liked him a lot in WOTW, and Collateral. As an actor he's stretching, and playing beyond and against type, and doing pretty well.

I didn't think I would, but I also liked Cruise in "Collateral." I haven't seen WOTW not really planning to see it because of all the problems in the plot I've "discovered" via the many spoilers.

RonB
"There's a story there...somewhere"
Take a look at a few websites, if you have the guts - http://www.xenu.net http://www.lisamcpherson.com/ http://www.scientology-lies.com / http://www.truthaboutscientology.com / I had a ... nothing matters as long as you're entertained, huh? Grow a spine some time - it might help your posture. www.scientologykills

Skip, I've looked into Scientology.
I've visited plenty of debunk sites.
I've read that Hubbard bio (Barefaced Messiah?)
I think Scientology is idiotic. Clams? Spacecraft that look like DC3s please!
However, I don't find that Cruise's belief in Scientology is in any way an issue when it comes to judging his acting, any more than Dustin Hoffman's Judaism is.
You have a personal history with Scientology that makes you see things differently. And your antipathy to it is pêrsonal and all-embracing.

Mine is simply one of disdain for the idiots who fall for it if I think about it all.
Here's a word of advice for you, since you're so free with yours:

Your ad hom attacks ("Grow a spine some time - it might help your posture") achieve only one thing:
They make you look like an idiot.
+++
By the way, looks like I may be in LA for a few days. Wanna meet for a coffee or something?

"Life is sweet and small. The rest is just talking. Let everyone live."
Dimitris Ouzounidis
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