The New York Attorney General’s office has launched a probe of Helios & Matheson, examining whether MoviePass’ parent company misled investors, according to CNBC.

Investigators are looking into the company’s financial disclosure using the Martin Act, an anti-fraud state law that allows law enforcement agencies to investigate suspected securities fraud and bring civil or criminal charges.

MoviePass confirmed the investigation, saying it is cooperating with the New York Attorney General’s inquiry.

“We believe our public disclosures have been complete, timely and truthful and we have not misled investors,” Helios & Matheson said in a statement. “We look forward to the opportunity to demonstrate that to the New York Attorney General.”

This development marks another setback for MoviePass, which reported a staggering $124.6 million operating loss in its June quarter and was hit by a shareholder lawsuit, filed in August, which alleged investors suffered losses because they were misled about the company’s business and its prospects.

Despite press releases touting MoviePass’ subscriber growth, the suit contends its business model was unsustainable and that it was inevitable that the parent company Helios would “run out of cash” or lose so much money as to raise questions about whether it could remain a viable business.

“MoviePass’ business model was not sustainable because there was no reasonable basis to believe MoviePass could monetize the model to a degree that could be maintained before being too buried in debt to survive,” shareholder Jeffrey Braxton argued in his suit, which seeks class action status.

A significant turning point for the company came on July 27, when Helios disclosed in a regulatory filing that it couldn’t make payments to its merchants, and that resulted in a service interruption. The company’s stock plummeted, losing 96% of its value since that SEC filing.

One of its directors, economist Carl Schramm, resigned from the board in August, claiming management had withheld critical financial information and made important decisions without the board’s knowledge.

In September, the company said it would attempt a reverse stock split, as it attempts to avoid being de-listed by the Nasdaq exchange. The stock closed trading today at 2 cents a share.