Business

Lionsgate hit with shareholder lawsuit

Lionsgate, the studio behind the “Hunger Games” movies, was hit with a shareholder lawsuit on Friday, alleging it fraudulently concealed a probe by the US Securities and Exchange Commission into whether it deceived shareholders as it fought off a hostile takeover by billionaire Carl Icahn.

The lawsuit, filed in US District Court in Manhattan, claims that shareholders suffered losses after Lionsgate , 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 SEC.

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 Lionsgate spokesman said in an e-mail that the lawsuit is “wholly without merit.” Lionsgate 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, Lionsgate 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.