• Reuters, Friday, August 1, 2008 11:45 AM

A federal judge recently ruled against a motion to dismiss a lawsuit against the execs that sold MySpace parent Intermix to News Corp. for $580 million in 2005. Apparently, shareholders felt shortchanged by the deal, particularly following the social network's rapid rise. Nevertheless, the July 14 decision by U.S. District Court Judge George King of the Central District of California means the matter will now go to trial.

The suit accuses ex-senior executives and directors of Intermix and its venture capital backer, VantagePoint Venture Partners, of defrauding shareholders of billions of dollars. In a statement, Brad Greenspan, former chairman of Intermix, said, "I knew that the value of the company was billions of dollars, however the deceptive practice of hiding MySpace financials by Intermix management robbed shareholders of their opportunity to adequately gauge the company's value." Specifically, the suit names former Intermix Chief Executive Richard Rosenblatt, former President Brett Brewer, and VantagePoint.

Rosenblatt declined to comment on the Reuters report, while Brewer and VantagePoint were not immediately reachable. Judge King's ruling is the latest development in a series of legal challenges launched by Greenspan since News Corp. bought MySpace in 2005. In October 2006, an L.A. judge rejected a similar challenge.

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