Perhaps the next Lions Gate movie will be called, “Carl Icahn’s Revenge.”
Icahn is still upset his former protégé Mark Rachesky screwed him out of $1 billion at Lions Gate Entertainment, a source familiar with Icahn’s thinking told The Post.
And since Rachesky’s Lions Gate, the studio behind “The Hunger Games,” admitted Thursday it violated securities regulations in 2010 when thwarting Icahn’s hostile takeover, sources believe Icahn will likely soon sue Rachesky.
Lions Gate, in admitting it misled shareholders — including Icahn, who owned an 18 percent stake in the company — agreed to pay a $7.5 million fine to the Securities and Exchange Commission.
Though the SEC did not give names in announcing the settlement of the civil suit, Rachesky, a Lions Gate director at the time, was the one fending off a takeover from his old boss.
Rachesky — whose MHR Fund Management still owns 37 percent of the studio’s shares — has reportedly made $1.5 billion on paper from his position.
Lions Gate violated an SEC rule by failing to inform its shareholders that a tender offer was being made during a proxy battle.
In a dramatic midnight board meeting at the height of Icahn’s hostile bid, Lions Gate allegedly swapped $100 million in notes it owed to Kornitzer Capital Management for a similar amount of notes that could be converted into stock, the SEC said in its suit.
Rachesky then immediately bought those notes for $6.20 a share from Kornitzer and converted them into common shares, the SEC said. That diluted Icahn’s stake and made it nearly impossible for him to buy the business, according to the SEC.
“At 12:01 a.m. New York time on July 20, 2010, one minute after [a] standstill agreement expired, the special committee convened a meeting and the board met immediately afterwards,” the SEC said.
The board first discussed the time period during which a director was precluded from trading Lions Gate stock and then voted to shorten it, the suit said.
Without this change, the friendly director would not have been able to convert the new notes to Lions Gate stock immediately after purchasing them from the note holder, the SEC said.
Rachesky’s shares have risen by more than five times since that midnight meeting.
Lions Gate shares closed Thursday down 3.2 percent to $32.20. In 2010, the stock was trading below $8 a share.
The SEC settlement may not be the end of the matter.
Lions Gate shareholders could also say the profit Rachesky made from his $105 million purchase of shares belongs to them.
This is not Rachesky’s first courtroom brushback.
In 2008, Delaware Judge Leo Strine ruled that a Rachesky financing move giving him control of Loral Space and Communication “was unfair.”
Loral, which was friendly to Rachesky, allegedly sold him a controlling stake in the business instead of testing to see what the company could attract in an open auction.
Icahn and Lions Gate declined to comment.