Lions Gate Entertainment Corp. (NYSE:LGF) (Lionsgate) has been hit with a lawsuit alleging fraud in the wake of a U.S. Securities and Exchange Commission (SEC) investigation into a hostile takeover bid.
Investors-rights law firm Hagens Berman Sobol Shapiro LLP filed the suit in New York state July 11 against the entertainment company, which was founded in Vancouver and has most of its offices in Santa Monica, Calif.
Lawyers allege Lionsgate misled investors about the true purpose behind a series of transactions designed to stave off a hostile takeover bid from shareholder Carl Icahn in 2010.
At the time, the company behind Mad Men and The Hunger Games claimed the transactions were part of a previously announced plan to reduce debt.
But an SEC investigation found Lionsgate had made no prior announcement.
Instead, the agency determined Lionsgate failed to inform investors the transactions were made to solidify the current management's control of the company.
Lionsgate declined an interview request regarding the lawsuit. Instead, a spokesman said in an email the case was “wholly without merit” and the company had no further comment.
In March 2014, Lionsgate admitted to wrongdoing and agreed to pay a $7.5-million fine to settle the SEC’s charges.
