An investigation on behalf of current investors of Lions Gate Entertainment Corp. (NYSE: LGF) shares over possible Federal Securities Laws violations was announced.

According to the investigation by a law firm on February 9, 2009, Lions Gate Entertainment Corp. (Lionsgate) released its third quarter financials after the close of the market, which included a net loss of $94 million for the quarter. In that release, Lionsgate stated as follows regarding the net loss:

The loss was primarily attributable to the underperformance of theatrical wide releases along with a reserve taken for the Companys HIT Entertainment North American DVD distribution deal due to several factors, including softness in the preschool non-theatrical retail market and unusually high returns from the field when Lionsgate took over distribution of the line [in March 2008]. These losses more than offset gains in Lionsgates television business. (Alteration added).

On February 10, 2009, Lionsgate held a conference call and elaborated on the size of the write-down as $47 million in reserves and charges and referred again to the unusually high returns Lionsgate had received from the field when it took over distribution of the HIT line. Jon Feltheimer, Co-Chairman and CEO of Lionsgate, also stated as follows:

a function when youve got the write-down that we took on HIT it really ate up so much of our profit from the distribution of our other home entertainment businesses.

In addition, so the investigation to the newly announced $47 million reserve charge, Lionsgate reduced its expected revenue for the year by $100 million to $1.4 billion from $1.5 billion. On the trading day after Lionsgates release of its third quarter financials, including the disclosure of the reserve charge, Lionsgate shares (NYSE: LGF) declined approximately $1.43, or 27%, to $3.90, so the investigation