MoviePass investigation: Investors applaud New York Attorney General

MoviePass invested in the film “Gotti”Vertical Entertainment/MoviePass Ventures

• MoviePass parent company Helios and Matheson is being investigated by the New York Attorney General, who is probing whether the firm misled investors.
• Helios and Matheson denied any wrongdoing to Business Insider.
• A half dozen Helios and Matheson investors expressed positive sentiments about the investigation to Business Insider, with several saying they felt misled about the company’s financial situation.

On Wednesday, news broke that the New York Attorney General had launched an investigation into whether Helios and Matheson Analytics, the owner of movie-ticket subscription service MoviePass, had misled investors.

Many investors weren’t surprised, they told Business Insider. In fact, some wondered why it had taken so long.

One retail investor, who asked not to be identified discussing his personal financial information, said he’d been “sending information to every agency trying to get them to look at the fleecing that has been going on.”

“This was a scam from the get-go,” he added.

Helios and Matheson denied misleading investors in a statement to Business Insider.

“We are aware of the New York Attorney General’s inquiry and are fully cooperating,” the company said. “We believe our public disclosures have been complete, timely and truthful and we have not misled investors.”

Unlike most startups, which are backed by venture-capital money, Helios and Matheson has covered the hundreds of millions of dollars in MoviePass losses by selling new shares of its Nasdaq-listed stock to the public. This has caused massive dilution for an army of passionate shareholders, many of whom have seen their stakes fall over 99% in value, with multiple telling Business Insider they had lost more than $100,000. According to Nasdaq, 99.96% of shares are held by non-institutional investors.

In August, numerous investors told Business Insider they had felt misled about the financial situation of MoviePass both by Helios and Matheson management and by the “buy” analyst ratings of two Wall Street firms whose banks made fees selling the stock (both have since suspended coverage).

“I think the New York Attorney General launching an investigation into the matter is a very good thing,” one investor said Thursday. “Thousands of people lost a great deal of money in this financial gimmickry, and it should be investigated.”

This sentiment was echoed by all the half-dozen investors contacted by Business Insider after the news broke.

“Seeking justice is a good thing,” another said. “The collapse of HMNY deserves to be investigated. If convicted of fraud or other crimes, responsible parties deserve to be punished accordingly. That’s all we can hope for at this point.” He said he’d lost hundreds of thousands of dollars on the stock.

Several investors expressed hope that the company could move forward if current management was removed, though some acknowledged that was still a slim possibility.

“Maybe it can get [Helios and Matheson CEO Ted Farnsworth] and his toxic friends out of there but I doubt it,” one investor said. Most believed their investment was lost for good.

“To be honest, I do not blame HMNY management anymore,” one said. “To expect good things from bad people is insanity. I blame myself for investing in HMNY even after knowing Ted’s past.”