Lionsgate Entertainment Chairman Mark Rachesky, who earned an approximately $1.5 billion paper profit when he led the studio into an improper debt swap, will not be the subject of a regulatory enforcement action, The Post has learned.
Lionsgate, the studio behind the Hunger Games franchise, admitted Thursday it should have told shareholders in 2010 about the debt swap — which was aimed at warding off a hostile takeover by Carl Icahn.
Lionsgate agreed to pay a $7.5 million fine to settle a lawsuit filed by the Securities and Exchange Commission.
SEC Chairwoman Mary Jo White trumpeted the fact that it was the first time in 25 years the regulator had gone after the subject of a hostile takeover using the tender offer rules.
Rachesky was in the middle of the action. The debt swap helped him remain the biggest Lionsgate shareholder.
The action also thwarted Icahn’s attempted takeover.
In the nearly four years since the transaction, Rachesky has made a roughly $1.5 billion paper profit.
But White has concluded a related investigation into Rachesky’s actions, sources said.
The regulator has just made clear it does not intend to take enforcement action against him, two sources close to the situation said.
An SEC spokeswoman confirmed the SEC was standing down on any Rachesky probe.
At the Thursday SEC press conference about the Lionsgate settlement, the SEC said its investigation was ongoing — but it declined to be more specific.
A securities lawyer, requesting anonymity, said it is hard to tell why the SEC did not levy a fine against Rachesky.
“They might have thought they didn’t have a case,” the lawyer said. “He could have cooperated.”
“I think there’s been a trend at SEC over the last several years toward taking enforcement action against individuals. But it’s tough to predict individual cases based on trends.”
The SEC could still refer the case to the US Attorney’s office for criminal action.
Rachesky spoke under oath in a 2010 Lionsgate trial over the same actions, sources said, in which the studio was exonerated.
The securities lawyer said it could very well pop up as a state enforcement matter.
In addition, a source close to Icahn said the investor may file a suit against the company.