MoviePass is under investigation for securities fraud in New York state

More bad news for MoviePass.

At the direction of New York Attorney General Barbara Underwood, MoviePass parent company Helios and Matheson is now the subject of a fraud probe in New York state.

“We’ve launched a securities fraud investigation into ⁦@MoviePass⁩’ parent company,” Underwood confirmed in a tweet. “My office is committed to protecting New York investors and the integrity of our financial markets.”

The probe will examine whether the company misrepresented its financial situation to investors. The probe will leverage the Martin Act, a powerful New York statute that allows the attorney general to aggressively pursue suspected instances of fraud in the state.

“We are aware of the New York Attorney General’s inquiry and are fully cooperating,” Helios and Matheson said in a statement provided to TechCrunch. “We believe our public disclosures have been complete, timely and truthful and we have not misled investors. We look forward to the opportunity to demonstrate that to the New York Attorney General.”

Underwood’s office declined to provide further details to TechCrunch, pointing us toward the CNBC report that originally reported the probe.

MoviePass and parent company Helios and Matheson (HMNY) has flailed wildly throughout 2018, abruptly making major changes to the movie subscription service, watching its stock prices walk off a cliff and seeking emergency infusions of cash in the process.

In Q2, Helios and Matheson posted losses of $126.6 million compared to a net loss of roughly $150 million in all of 2017. Its 2017 losses were attributed to its acquisition of a majority stake in MoviePass, but the 2018 losses are obviously a different story. Shares of Helios and Matheson were down 8.5 percent at the time of writing.