Five shareholders have filed a lawsuit over Emmis Communications' complex stock plans. According to the Indianapolis Star, the dissident shareholders countersued the company in a 56-page lawsuit, alleging violations of federal securities and state corporate laws. It also claims Emmis is in the midst of a "brazen scheme" to remove the rights of its own preferred shareholders and not pay out $10 million in owed dividends.
According to the paper, the suit also claims that Emmis has created "illegal 'zombie shares' that are retired yet retain their voting rights" and "pressured preferred shareholders with 'manipulative acts,'" as well as setting up a "sham" stock trust to help Emmis gain a larger share of preferred shares to control voting rights.
In a statement released yesterday, Emmis called the allegations in the lawsuit "scurrilous and completely without merit. We intend to vigorously defend our actions and protect the interests of the hundreds of Emmis shareholders from the unreasonable and irrational demands of the few."
Last month, Emmis sued the same five shareholders, seeking a court ruling to declare its stock plan legally valid.