A law firm recently announced it has filed a securities class action lawsuit against an entertainment company for potential breaches of federal securities laws.
Pomerantz, LLP, explained that the lawsuit was filed in the U.S. District Court for the Southern District of New York against Lions Gate Entertainment Corp. The litigation seeks to recover damages for investors who acquired shares of the film and television distribution company between February 11, 2013, and March 13, 2014.
The securities class action lawsuit alleges that Lions Gate Entertainment and certain officers violated federal securities laws under the Securities Act of 1933 and the Securities Exchange Act of 1934. During the class period, the company was under investigation by the U.S. Securities and Exchange Commission for allegedly making false or misleading statements and omissions regarding a series of transactions related to an attempted takeover.
Though the company was being investigated by the SEC, the litigation claims that it failed to disclose the federal scrutiny, the potential for future legal proceedings and its exposure to possible losses due to the aforementioned allegations. Lions Gate had claimed that the transactions made in an effort to prevent the potential takeover were necessary as a part of its debt reduction strategy. However, the SEC found that such a debt reduction plan didn't actually exist. The lawsuit claims the true intentions of the company's activities were disguised from investors following the announcement of its "debt reduction" transactions.
Any shareholder that purchased securities in Lions Gate during the class period will have until Sept. 9, 2014, to ask the court to be appointed as lead plaintiff for the class action lawsuit. The best person to contact for more information about the litigation is Robert S. Willoughby.
Carl Icahn's attempted takeover
In March 2010, Carl Icahn began a series of tender offers meant to catalyze his intended takeover of Lions Gate by increasing his ownership interest in the company and consequently gaining the ability to appoint his chosen representatives to the board of directors. However, Lions Gate's management, as well as the board, were not partial to Icahn's plans and initiated a number of transactions that would prevent his attempted takeover.
The following July the board, along with management, approved and facilitated transactions that moved more than 16 million shares of common stock to director Mark Rachesky, and diluted the interests of other shareholders – Icahn included. The class action lawsuit alleges the company then misrepresented the purpose of its actions and hid the subsequent SEC investigation from investors.
On March 13, 2014, an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934 was issued to Lions Gate by the SEC. The investigation was then settled, with the company agreeing to $7.5 million in fines and its acknowledgment of securities violations.