Facing Legal Troubles, Mobile Content Provider Motricity Looks for Exit Options, Possible Sale

Embattled mobile content services firm Motricity is looking at possible exit strategies following a string of legal issues and executive leadership shakeups that have forced the once successful mobile company into a tailspin.

The company announced recently that it had secured a $20M loan with High River Limited Partnership, a venture capital firm owned by Carl Icahn, who also owns approximately 14.6 percent of Motricity.  The company is quickly trying to rebuild itself following several lawsuits and an $11M insider trading scheme perpetrated by former CEO Ryan Wuerch and other senior executives.

Just last month, law firm Goldfarb Branham LLP announced a class action against the company regarding alleged violations of shareholder protection laws and detailing the insider trading scheme that has devastated the company’s finances.

Another class action suit the company is facing accuses Motricity of violating the Securities Act of 1933 and the Securities Exchange Act of 1934.  According to the suit, Motricity priced its June 2010 IPO at $10 per share, for net proceeds of $51.4 million, but misled investors by asserting the company would “continue to achieve success despite the increasing popularity of smartphones.”  The law firm that filed the suit claims that as a result of Motricity’s statements, its stock traded at artificially inflated prices, peaking at $30.74 per share on Nov. 9.  Following the exit of the executives involved in the scandal, Motricity is still looking for replacements.

The company has retained GCA Savvian Advisors as it explores strategic options including a spinoff, sale or other transactions involving its operator business and mobile marketing initiatives.