• by Wayne Friedman , April 17, 2009

WPP Group has sued new-style advertising/media company Spot Runner for $13 million for securities fraud and breach of contract. WPP -- a minority investor in the company since 2006 -- says Spot Runner executives have been "pumping" up the company's value, all in an effort to get new investors on board.

Spot Runner was designed for smaller and new advertisers as a discount shop, giving marketers simplified, turnkey access to creative and media-buying tools.

The suit names Spot Runner, chairman/CEO Nick Grouf, David Waxman, co-founder and chief technology officer; Peter Huie, general counsel; and board members Danny Rimer and Roger Lee. Two venture capital firms -- Battery Ventures and Index Ventures -- were also included.

In a lawsuit filed in the U.S. District Court, Central District of California, WPP claims that Spot Runner "perpetuated a 'pump-and-dump' scheme in which it aggressively promoted the company to new investors (often by promoting that WPP was an investor in and supporter of the company)..."

A Spot Runner spokeswoman responded: "This situation is unfortunate. We had hoped that we would have had a long relationship with WPP. We believe the claims are without merit, and we will vigorously defend against them, including taking all necessary legal action to protect Spot Runner's reputation."

Other Spot Runner investors include Interpublic Group of Cos., CBS Corp., Daily Mail and General Trust, Grupo Televisa, S.A.B. Allen & Co., Legg Mason and Tudor Investments. WPP was one of the earliest investors in Spot Runner, signing on as a minority investor in August 2006.

The lawsuit comes on the heels of Spot Runner scaling back its operations, trimming its staff a number of times over the last several months.

On its Web site, Spot Runner says its clients include Disney, 24 Hour Fitness, Paramount Vantage, Microsoft, Baja Fresh, Carrier, LexisNexis, BlueCross Blue Shield and Coldwell Banker.