Funko CEO, Board, Backers Accused of Abusing ‘Up-C’ Structure

A Funko Inc. investor filed suit in Delaware against its controlling stockholders, claiming they’re abusing the toymaker’s pass-through “up-C” corporate structure to “double-dip” in its profits by blocking distributions from the operating subsidiary to its publicly held parent company.

The lawsuit, made public late Monday in Delaware Chancery Court, targets several members of Funko’s board—including CEO Brian Mariotti—and its private equity backers, ACON Investments LLC and Fundamental Capital LLC.

It accuses them of wrongly taking distributions from the operating company, in which they’ve held equity since before Funko’s 2017 initial public offering, while limiting its distributions to the holding corporation ...