Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26207 / January 2, 2025

Securities and Exchange Commission v. Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum, No. 22-civ-08226 (S.D.N.Y. filed Sept. 26, 2022)

SEC Obtains Judgment Against Former Executive at MoviePass’s Parent Company

On December 23, 2024, the U.S. District Court for the Southern District of New York entered a consent judgment against Theodore J. Farnsworth, former CEO of Helios & Matheson Analytics Inc. (HMNY), for making materially false and misleading statements concerning HMNY’s subsidiary, MoviePass, Inc., a movie subscription service.

According to the SEC’s complaint, between August 2017 and at least March 2019, Farnsworth and another defendant intentionally and repeatedly made misstatements in HMNY Commission filings, press releases, and in the press concerning key aspects of MoviePass’s business model. The misstatements concerned HMNY’s claim that MoviePass could be profitable at its new, $9.95-per-month subscription price; HMNY's purported data analytics capabilities; and HMNY's ability to fund MoviePass's operations. As further alleged in the complaint, Farnsworth also devised fraudulent tactics to prevent MoviePass's subscribers from using the service. In addition, the complaint alleges that, between January and April 2018, Farnsworth knowingly approved false invoices that a third defendant, a former MoviePass executive, submitted to HMNY and MoviePass, disguising bonus payments as services purportedly provided by an entity that the third defendant controlled. The litigation against the other defendants continues.

Farnsworth consented to the entry of a judgment (i) providing permanent injunctive relief under Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and (ii) permanently enjoining him from violations of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder and from aiding and abetting violations of Section 13(b)(2)(A) of the Exchange Act. In the judgment, Farnsworth also consented to the entry of a conduct-based injunction and an officer and director bar. The SEC’s complaint also seeks disgorgement, prejudgment interest, and civil penalties, which will be determined by the court at a later date, upon motion of the SEC.

The SEC's litigation is being handled by Elizabeth Butler and Tian Wen, under the supervision of Jack Kaufman and Thomas P. Smith, Jr., all of the New York Regional Office.