According to the law firm press release, Lionsgate is a film studio that produces and distributes motion pictures, television, home and family entertainment, and digital media. The complaint alleges that by the start of the Class Period, and unbeknownst to investors, Lionsgate was under investigation by the U.S. Securities and Exchange Commission (“SEC”) for making false and misleading statements and omissions concerning a series of transactions (“Transactions”) designed to prevent a takeover of the Company by Carl Icahn and his affiliates (“Icahn”). During the Class Period, however, Lionsgate and the other defendants misrepresented and/or failed to disclose the existence of the SEC investigation, the prospect of legal proceedings associated with the misconduct under investigation, and the Company’s exposure to loss in connection therewith.
On March 13, 2014, the SEC issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (“Order”), which memorialized the resolution of the investigation and charges against Lionsgate for making false and misleading disclosures regarding the Transactions. As detailed in the Order, and alleged in the complaint, Lionsgate settled the investigation by, among other things, agreeing to pay $7.5 million in fines and acknowledging that it had violated the federal securities laws.
The issuance of the Order exposed Lionsgate’s false and misleading representations and omissions during the Class Period. Specifically, Lionsgate repeatedly represented that it had disclosed all material legal proceedings, when, in fact, it failed to disclose the existence of the SEC investigation and its material risk and exposure to loss. Accordingly, Lionsgate’s public statements regarding its involvement in and exposure to claims and legal proceedings were false and materially misleading when made, and otherwise omitted material information. Indeed, Lionsgate and the other defendants knew or recklessly disregarded that the existence of the SEC’s investigation exposed the Company to material risks and uncertainties and exposure to loss, including regulatory proceedings, sanctions and fines.
In response to the publication of the Order on March 13, 2014, the price of Lionsgate common stock declined as the market digested the truth regarding the Company’s exposure, thereby damaging investors. In the lawsuit filed today, the plaintiff seeks to recover damages on behalf of all purchasers of Lionsgate common stock during the Class Period.
This case was dismissed with prejudice on January 22, 2016. Lead Plaintiffs filed a Notice appealing this decision on February 24. On June 7, Lead Plaintiffs filed a stipulation withdrawing the appeal.