(NEW YORK) — CBS and its senior leadership knew about multiple allegations of sexual assault against former chief executive Les Moonves but intentionally concealed them from shareholders, regulators and the public, according to an investigation by the New York attorney general’s office that alleged insider trading and violations of consumer protection law that are now part of a $30 million settlement.
A senior CBS executive who knew about the allegations, former chief communications officer Gil Schwartz, sold millions of dollars in company stock in the weeks before the allegations became public, the attorney general’s office said.
The network fired Moonves in December 2018 after two law firms conducted an investigation into sexual misconduct allegations. That triggered a lawsuit by shareholders who alleged CBS and some of its current and former executives made false statements or failed to disclose material information about how the company handles sexual harassment complaints in the workplace.
The attorney general’s investigation also accused a captain of the Los Angeles Police Department of “direct and repeated interference” and violating confidentiality rules when the captain informed CBS about one complaint against Moonves and worked with network executives to prevent the complaint from becoming public.
“Hopefully we can kill media from PD. Then figure [sic] what [Complainant #1] wants,” the attorney general’s office quoted a text message from Moonves as saying.
The New York attorney general’s office said it has referred the matter involving the LAPD captain to the California attorney general.
The LAPD released a statement Wednesday acknowledging the New York attorney general’s investigation “involving the actions of a former command officer of the Department while assigned as a Captain to Hollywood Division.”
“We are fully cooperating with the New York and California Attorney General offices and have also initiated an internal investigation regarding the conduct of the retired command officer as well as to identify any other member(s) of the organization that may have been involved,” the statement said.
LAPD Police Chief Michel Moore added, “What is most appalling is the alleged breach of trust of a victim of sexual assault, who is among the most vulnerable, by a member of the LAPD. This erodes the public trust and is not reflective of our values as an organization.”
According to the attorney general’s office, the same day an individual filed a confidential criminal sexual assault complaint against Moonves at an LAPD station in Hollywood, the former LAPD captain informed a CBS executive of the confidential complaint. The LAPD captain shared an unredacted police report with the executive, who shared it with Mr. Moonves and other executives at CBS, the AG’s investigation found.
The settlement requires Moonves and CBS to pay $30.5 million to shareholders. CBS must reform its human resources practices around sexual harassment and provide biannual reports to the attorney general’s office.
“CBS and Leslie Moonves’ attempts to silence victims, lie to the public, and mislead investors can only be described as reprehensible,” said New York Attorney General Letitia James. “As a publicly traded company, CBS failed its most basic duty to be honest and transparent with the public and investors. After trying to bury the truth to protect their fortunes, today CBS and Leslie Moonves are paying millions of dollars for their wrongdoing.”
As CBS tried to hide these allegations, the company authorized its former chief communications officer, Schwartz, who was one of the few people with information about the allegations and the LAPD police report, to sell his shares, the attorney general’s office said. Schwartz died in May 2020.
Six weeks before the first article about the allegations became public, Schwartz sold 160,709 shares of CBS stock at an average weighted price of $55.08 for a total of $8,851,852. The stock dropped 10.9% from the day before the news broke to the trading day after, according to the attorney general’s office.
“We have reached an agreement in principle to resolve the matter with the Investor Protection Bureau of the New York State Attorney General’s Office,” Paramount Global, CBS’s parent company, said in filing with the Securities and Exchange Commission Wednesday. “The resolution includes no admission of liability or wrongdoing by the Company.
Moonves agreed to pay $2.5 million, and CBS will pay the rest of the settlement, according to a letter filed Wednesday with the federal judge in Manhattan handling the case.
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