Former MoviePass CEO Turns to Bank, Settles SEC Charges

The U.S. District Court for the Southern District of New York has barred the former head of MoviePass’s parent company from ever running a public U.S. company, accepting a settlement that resolves charges from regulators that he misled investors about the service’s profitability movie subscription.

U.S. District Judge Katherine Polk Failla signed the proposed ruling Friday by Theodore “Ted” Farnsworth and the U.S. Securities and Exchange Commission.

The sentence also prohibits Farnsworth from federal securities law and requires him to repay any ill-gotten gains. The ruling mirrors another proposed settlement by Farnsworth and the SEC last week that resolves separate — and new — allegations that Farnsworth secretly ran the digital media business, Vinco Ventures, while federal officials investigated his role in MoviePass.

Sam Rabin of Robin & Lopez, who represents Farnsworth in both cases, said his client reached the settlements “to accept responsibility for his actions and put this matter behind him.”

Farnsworth was the former CEO of Helios and Matheson Analytics Inc., the parent company of MoviePass. The service allowed users to watch one movie a day for $9.95 a month — a deal that later led the company to bankruptcy.

After MoviePass shut down, the US Department of Justice filed criminal charges against Farnsworth, while the SEC pursued civil charges alleging that Farnsworth misleading investors on the sustainability of the $9.95 offer and Helios’ ability to finance MoviePass.

Former MoviePass CEO J. Mitchell Lowe had been sued alongside Farnsworth. He pleaded guilty to conspiracy to commit securities fraud in the criminal case in September.

In addition to the MoviePass litigation, Farnsworth faced legal fire for his role in the digital media company, Vinco, which the SEC alleged Farnsworth secretly controlled through a series of public directors who followed his direction . Farnsworth covered up his management of Vinco, the agency alleged, to prevent federal officials from scrutinizing Vinco as well as to boost the company’s investment prospects.

“Once Farnsworth was publicly charged by the Commission and criminal authorities, he understood that revealing that he controlled Vinco would make the company less attractive to investors,” according to the SEC’s filing on Dec. 23.

The SEC also alleged that Farnsworth misled investors about Vinco’s technological capabilities following its merger with Zash Global Media & Entertainment Corp., another Farnsworth company.