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Ex-Midway execs win court case

By David Jenkins

Tue 27 Oct 2009 10:03am GMT / 6:03am EDT / 3:03am PDT

Federal court judge rules against allegations of purposeful deception

A US District Court judge has ruled in favour of former Midway Games executives, following a case brought by shareholders that alleged the company had tried to hide the truth about its financial status.

Shareholders lost millions when the company was sold to Warner Bros earlier in the year, after majority shareholder Sumner Redstone controversially sold his 87 per cent stake to investor Mark Thomas for just USD 100,000, along with USD 70 million of assumed debt.

Investors were immediately suspicious of the mysterious Thomas and allegations of fraudulent trading quickly arose. An initial lawsuit was settled in June, which allowed Thomas to gain USD 5 million in profits from the USD 33 million sale to Warner Bros.

The latest court case alleges that executives knowingly kept information from the public, while they sold their own shares at a considerable profit. Those named in the lawsuit include former CEO David Zucker, CFO Thomas Powell, chief marketing officer Steven Allison, controller James Boyle and senior vice president for publishing Miguel Iribarren.

However, according to a Chicago Sun-Times report Judge David H Coar ruled that executives never "said or did anything more than publicly adopt a hopeful posture that its strategic plans would pay off". Judge Coar also ruled that stockholders had not "adequately alleged the direct liability” of any specific executive.

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