| NEW YORK, July 11
NEW YORK, July 11 Lions Gate Entertainment Corp,
the studio behind the "Hunger Games" movies, was hit with a
shareholder lawsuit on Friday that alleges it fraudulently
concealed a U.S. regulatory probe into whether it deceived
shareholders as it fought off a hostile takeover by billionaire
The lawsuit, filed in U.S. District Court in Manhattan,
claims that shareholders suffered losses after Lions Gate
, which also produces TV shows such as "Mad Men," on
March 13 agreed to pay $7.5 million and admit wrongdoing to
settle the probe by the U.S. Securities and Exchange Commission.
That accord was the first time in roughly three decades that
the SEC had brought an enforcement case against a target of a
hostile tender offer. Lions Gate's share price
fell 8.8 percent in the three trading days after the settlement.
A Lions Gate spokesman did not immediately respond to
requests for comment. Lions Gate is based in Vancouver, British
Columbia, and has offices in Santa Monica, California.
The SEC case arose from a series of transactions in July
2010 that boosted the ownership stake of a management-friendly
director, Mark Rachesky, and diluted Icahn's stake.
According to the SEC, Lions Gate misled investors by
claiming the transactions were part of a plan to reduce debt,
not to block a takeover, and also failed to get shareholder
approval as required under a New York Stock Exchange rule.
Rachesky is now Lions Gate's chairman; Icahn lost his proxy
The plaintiff in the shareholder lawsuit, Laborers Pension
Trust Fund-Detroit & Vicinity, said Lions Gate knew for more
than a year before the settlement that the SEC and NYSE were
looking at the transactions. But it said the company
deliberately concealed it, including on a Feb. 7, 2014,
conference call when an analyst asked why the company had
recently boosted a reserve for legal costs.
The lawsuit said Lions Gate's actions fraudulently inflated
its stock price. It seeks class-action status on behalf of
shareholders from Feb. 11, 2013, to March 13, 2014.
Four Lions Gate officials, including Chief Executive Jon
Feltheimer, are also defendants. Icahn is not a defendant.
The case is Laborers Pension Trust Fund-Detroit & Vicinity
v. Lions Gate Entertainment Corp et al, U.S. District Court,
Southern District of New York, No. 14-05197.
(Reporting by Jonathan Stempel in New York; Editing by Leslie