WWE sharehold lawsuit claims Vince McMahon investigation was a ‘sham’
New filings in the shareholder class action lawsuit against WWE allege the company’s investigation into Vince McMahon was a “sham” and that McMahon manipulated the sale process to TKO for his benefit. Wrestlenomics reports that the lawsuit, filed in November 2023, is in the Delaware Court of Chancery and details allegations made by shareholders.
The case features plaintiffs from Ohio and Michigan pension funds, along with Dennis Palkon, who has participated in previous lawsuits against WWE. They demanded to inspect WWE’s records and obtained the Board of Directors’ meeting minutes, offering insights into WWE’s decisions regarding the McMahon investigation and the merger process.
Much of the minutes are redacted, but public disclosures indicate that several board members attempted to resign after a June 2022 report on McMahon’s payments related to sexual misconduct allegations. Stephanie McMahon, then a Board member, persuaded them to stay. She became interim CEO and Chair the next day after McMahon’s resignation.
Some board members, including Man Jit Singh and Ignace Lahoud, eventually resigned after McMahon’s return in January 2023. The complaint cites Board minutes stating, “While [Singh and Lahoud] agreed with the Board’s decision to explore the Company’s strategic alternatives, they did not agree with Mr. McMahon’s return at this time.” McMahon was approved as Executive Chairman shortly thereafter, with Nick Khan, Triple H, and Steve Koonin “revers[ing] course” to approve his return despite prior opposition.
The filings claim the Board’s investigation into McMahon was a “sham,” stating: “During McMahon’s brief hiatus, the Special Committee (including Defendants [then-WWE Board members Steve] Koonin and [Steve] Pamon) conducted a sham investigation of the allegations against McMahon. The Special Committee facilitated the cover-up by ensuring that they received no written materials throughout the entirety of that committee’s existence.” Additionally, the Special Committee allegedly did not interview any victims, censure McMahon, or issue a report.
The plaintiffs argue that rather than concluding the investigation, the Special Committee merely shifted it among different Board committees. They also allege WWE misled shareholders about the investigation’s status, which it claimed was nearing completion but was actually stalled. Furthermore, they state McMahon and WWE executives ensured Endeavor was the only viable bidder, despite other potential bidders being willing to satisfy all WWE investors, suggesting the Endeavor deal was structured to benefit McMahon.
Several parties, including Board members and firms involved in the merger process like J.P. Morgan, Moelis, Paul Weiss, and Kirkland & Ellis, have been subpoenaed for documents and testimony.
