Lions Gate Entertainment Corp To pay $7.5M to settle with SEC over incomplete disclosures
- The Securities and Exchange Commission today charged motion picture company Lions Gate Entertainment Corp with failing to fully and accurately disclose to investors a key aspect of its effort to thwart a hostile takeover bid.
- According to the SECs order instituting settled administrative proceedings, Lions Gates management participated in a set of extraordinary corporate transactions in 2010 that put millions of newly issued company shares in the hands of a management-friendly director. A purpose of the maneuver was to defeat a hostile tender offer by a large shareholder who had been locked in a battle for control of the company for at least a year. However, Lions Gate failed to reveal that the move was part of a defensive strategy to solidify incumbent managements control, instead stating in SEC filings that the transactions were part of a previously announced plan to reduce debt. In fact, the company had made no such prior announcement. Lions Gate also represented that the transactions were not prearranged with the management-friendly director, and failed to disclose the extent to which it planned and enabled the transactions with the expectation that the director would get the shares.