Risk Management

IMAX, Former CFO, and Others Sued

The ex-CFO, who said several months ago that he wanted to pursue other opportunities, left on Monday to take a job at another publicly-listed company.
Stephen TaubAugust 22, 2006

A class-action lawsuit has been filed against IMAX Corp., its former CFO, and two other executives alleging that they made “false and misleading statements” about the company’s financial health.

The suit, at least the second one filed in the past week against the movie-theater company, charges that in the fourth quarter of 2005 IMAX recognized revenue from theaters that weren’t yet opened in order to inflate its financial results. The inflated results were aimed to attract a buyer or merging partner for the company, the plaintiffs allege. The earlier lawsuit makes similar charges.

Further, on August 9, IMAX announced that it was responding to an informal inquiry from the Securities and Exchange Commission regarding its revenue-recognition issues. The company’s shares slumped more than 40 percent on the news, the suit asserts.

The three executives named in the complaint are Francis Joyce, who resigned as CFO on Monday to take a job at another publicly-listed company, and co-chief executive officers Richard Gelfond and Bradley Wechsler. Joyce told the company several months ago of his desire to pursue other professional opportunities, IMAX said on Monday in a regulatory filing.

The company named Edward MacNeil, who has been part of the company’s finance team for 12 years, as interim CFO. MacNeil served most recently as vice president of finance, tax and special projects.