A group of current and former Tinder employees are suing their parent company over an alleged scheme to cheat them out of stock options. Match Group, and its parent company IAC/InterActiveCorp, are the defendants.
Sean Rad, Justin Mateen and Jonathan Badeen, who are the co-founders of Tinder, are among the plaintiffs in the two billion dollar lawsuit. The plaintiffs accuse IAC and Match Group of manipulating financial data to make it appear that Tinder’s value was drastically lower than it actually was. After formulating the lowball valuation, the plaintiffs say that the parent company stripped many of Tinder’s employees of their stock options. IAC/Match removed Rad as Tinder’s CEO, putting in his place Greg Blatt, a Match CEO.
Blatt is accused of harassing Tinder employee and plaintiff Rosette Pambakian at a company holiday party in 2016. However, plaintiffs allege that IAC/Match kept Blatt in place long enough to complete the unreliable value of the company and to orchestrate a merger with Match Group, essentially transforming the successful company into a stagnant holding company.
IAC/Match claimed that Tinder was worth about three billion dollars at the time, which was the same value that the parent companies had assigned to Tinder two years before. This valuation remained the same even though Tinder’s user base had increased by 50 percent in that period with revenue expanding by 600 percent.
In the lawsuit, plaintiffs allege that the parent companies systematically lied to Tinder’s employees with the aim of cheating them out of the stock-option money to which they were entitled according to a contract. A recent SEC filing by IAC/Match shows a projected $800 million in earnings for 2018, which totals 75 percent more than the projections the company published last year.
The complaint states that the more Tinder earned, the more the parent companies were required to pay to Tinder employees. This seems like a fairly solid motive for IAC/Match’s alleged actions. However, copious discovery and a possible jury trial will be required. Protect the interests of your company by working with a qualified business attorney.