The ousted CEO and chairman of the board has filed suit against the remaining Medient Studios board members, and the Securities and Exchange Commission has suspended trading in Medient’s stock until July 9.
Citing questions regarding the accuracy and adequacy of publicly available information about the company, including the number of shares outstanding and its operations, SEC Deputy Commissioner Kevin M. O’Neill ordered the suspension of Medient stock trading Wednesday.
Manu Kumaran, unseated in a vote by the other board members two weeks ago, filed suit Monday in Washoe County, Nevada. Medient’s offices are in Savannah but it was incorporated in Nevada.
Kumaran is suing current CEO Jake Shapiro, current board chairman Charles Koppelman, Joseph Giamichael and David Paterson, alleging the four have “colluded to grossly mismanage the corporation in the conduct and control of Medient affairs.” He also is asking for the court to dissolve the company.
Kumaran was fired during a vote on a June 9 conference call, and he charges that the other directors’ actions “occurred solely to dilute Kumaran’s position as the company’s majority shareholder through improper means and less than fair value.”
Shapiro announced in a June 12 conference call with Medient shareholders that he was taking over as CEO, with Shapiro receiving 40 million shares of preferred stock. Kumaran alleges the stock issuance was done at less than fair value. He also said that Shapiro provided no consideration in exchange for the stock, and the stock was issued to Shapiro for the sole purpose of diluting Kumaran’s interest in Medient.
According to Medient’s SEC filings, Kumaran acquired controlling interest on Aug. 28, 2012, through a stock purchase. On March 19, 2013, the studio entered into a memorandum of understanding with the Effingham Industrial Development Authority to build a studioplex on 1,550 acres off Interstate 16 and Old River Road. A year later, March 21, Medient announced Shore Development and Construction as the construction manager for the studioplex.
Medient entered into a 20-year lease on Aug. 21, 2013 for the property with a total rent of $10 million.