Lions Gate wins dismissal of lawsuit over SEC probe, Icahn bid
By Jonathan Stempel
(Reuters) - Lions Gate Entertainment Corp, the studio behind the "Hunger Games" movies and TV shows including "Mad Men," on Friday won the dismissal of a shareholder lawsuit claiming it fraudulently concealed a U.S. regulatory probe into how it thwarted a hostile takeover by billionaire Carl Icahn.
U.S. District Judge John Koeltl in Manhattan said in a 56-page decision that the shareholders failed to show that Lions Gate's disclosures concerning the U.S. Securities and Exchange Commission probe were materially false or misleading, or that the company intended to deceive them.
Shareholders led by Belgium-based KBC Asset Management NV sued Lions Gate after the company in March 2014 agreed to pay $7.5 million and admit wrongdoing to settle with the SEC.
It was the regulator's first enforcement case in roughly three decades against the target of a hostile tender offer. Lions Gate's share price fell 8.8 percent over the next three trading days. The lawsuit had sought class-action status.
Lawyers for the shareholders did not immediately respond to requests for comment. Lions Gate did not immediately respond to a similar request.
The case arose from transactions in July 2010 that boosted the stake of a management-friendly director, current Chairman Mark Rachesky, and diluted Icahn's stake in Lions Gate, which operates from Vancouver, British Columbia and Santa Monica, California.
According to the SEC, Lions Gate had misleadingly claimed that the transactions were meant to cut debt rather than block a takeover, and failed to get needed shareholder approvals.
Koeltl, however, said the plaintiffs did not show that Lions Gate's failure to reveal more about the probe sooner undercut its statements that any resolution would not be material. Continued...