×
You will be redirected back to your article in seconds

Judge Dismisses Suit Alleging Lionsgate Hid SEC Probe

A federal judge has dismissed a shareholder suit alleging that Lionsgate had concealed a U.S. regulatory investigation into its effort to prevent a hostile takeover by billionaire Carl Icahn.

U.S. District Judge John Koeltl in Manhattan, in a 56-page ruling issued Friday, found the plaintiff shareholders failed to show that Lionsgate’s disclosures related to the U.S. Securities and Exchange Commission probe were materially false or misleading.

The suit, which sought class-action status, was filed by KBC Asset Management NV in July, 2014, in U.S. District Court in New York City against Lionsgate and four of its top executives.

The action was filed four months after Lionsgate had agreed to pay $7.5 million and admit wrongdoing to settle Securities and Exchange Commission claims that the studio failed to disclose all information about its 2010 efforts to block Icahn’s hostile takeover.

The SEC said when it disclosed the settlement that Lionsgate management engaged in transactions that allowed board member Mark Rachesky to boost his stake through newly issued shares — effectively blocking Icahn’s takeover bid. The SEC took issue with the fact that Lionsgate did not disclose that the $100 million debt-to-equity swap reduced Icahn’s stake to 33.5% from 37.3%.

Icahn filed suit but settled in August 2011 as part of cashing out his stake for $7 a share, or $310 million.

“Lionsgate failed to reveal that the move was part of a defensive strategy to solidify incumbent management’s control, instead stating in SEC filings that the transactions were part of a previously announced plan to reduce debt,” the SEC said.

The SEC’s order found Lionsgate violated two sections and three rules and required Lionsgate to “cease and desist” from future violations.

Lionsgate had no comment Friday and a spokesman noted that the company does not comment on litigation as a matter of corporate policy.

Popular on Variety

More Film

  • THE-CURSE-OF-THE-HANDSOME-MAN-photo2

    Filmax Acquires International on ‘The Curse of the Handsome Man’ (EXCLUSIVE)

    SAN SEBASTIAN  —  Barcelona-based boutique studio Filmax has acquired international rights to Argentine producer-director Beda Docampo’s “The Curse of the Handsome Man,” produced by Ibón Cormenzana’s Arcadia Motion Pictures alongside Cados Producciones and Damned Besso –based in Spain—in co-production with Cecilia Díez’s Zarlek Producciones (“Medianeras”) in Argentina. The film is backed by Spanish public broadcaster [...]

  • La-mala-familia

    Javi Tasio Talks ECAM Incubator Title ‘La Mala Familia’

    SAN SEBASTIAN  —  Via their BRBR collective, filmmakers Nacho A. Villar and Luis Rojo have directed award winning music videos, and commercias. Now they’ll make the leap to features with “La Mala Familia,” a gritty urban drama set in the outskirts of Madrid. Variety spoke with the film’s producer, Javi Tasio, who developed this project at ECAM’s [...]

  • Submerged

    Outsider Takes World Sales on ‘Submerged’ (EXCLUSIVE)

    SAN SEBASTIAN  — Paul Hudson’s Outsider Pictures has acquired world sales rights to“Submergible” (Submerged) a narco capsule-sub-set drama thriller from Ecuador’s Alfredo León León who debuted with an original prisoner-of-war drama, “Open Wound.” Written by Daniela Granja Nuñez and Alfredo León León, “Submerged” is produced out of Ecuador by León León’s Boom en Cuadro and [...]

  • Charlie-Chaplin-and-Horse-Roy-Export-Co

    Carmen Chaplin to Direct ‘Charlie Chaplin, a Man of the World’ (EXCLUSIVE)

    SAN SEBASTIAN  — Director-producer-actress Carmen Chaplin is set to direct “Charlie Chaplin, a Man of the World,” a theatrical documentary feature which will add a hardly-explored new facet to the creator of the Tramp, one of the most iconic cinema characters in popular consciousness, plumbing Chaplin’s Romani roots and heritage. Marking the first time that [...]

  • Incitement

    'Incitement' Wins Ophir Award for Best Picture, Becomes Israel's Oscar Submission

    “Incitement” was the best-picture winner at Israel’s Ophir Awards on Sunday night, automatically becoming the country’s choice to vie for the international feature film Oscar. The winning film, a drama about the period leading up to the assassination of Israeli Prime Minister Yitzhak Rabin by a Jewish extremist in 1995, had its global premiere at [...]

  • LargoAI

    LargoAI Wins Inaugural San Sebastian Zinemaldia & Technology Startup Challenge

    SAN SEBASTIAN  —  Swiss artificial intelligence and data analytics company LargoAI won Sunday’s first-ever San Sebastian Film Festival Zinemaldia & Technology Startup Challenge. LargoAI’s software provides data-driven filmmaking strategies, similar to those used by major VOD platforms which aggregate and often horde their own user-driven data. From early in the screenwriting process through development and [...]

More From Our Brands

Access exclusive content