What happened

Shares of Camping World (CWH) briefly fell by nearly 13% on Thursday following a report that the company's celebrity CEO was named in a shareholder lawsuit claiming that he and an associate had manipulated the market while taking the RV retailer public. The stock recovered much of that loss soon after but finished down more than 3% on the day.

So what

Camping World chairman and CEO Marcus Lemonis, a private-equity veteran who's perhaps best known as the host of CNBC's The Profit, is the target of a lawsuit unsealed April 17 in Delaware Chancery Court, according to a Bloomberg report. The suit, which was filed by the Lincolnshire (Ill.) Police Pension fund, alleges that Lemonis and associates used a series of public offerings to cash out of Camping World without relinquishing control and despite knowing that Camping World was "in no way ready to be a public company."

An RV drives along a rural road as the sun sets behind it.

Image source: Getty Images.

The lawsuit alleges Lemonis and his associates made more than $530 million selling shares that they knew were artificially inflated in value. The suit says that last year, as news came out about what the lawsuit calls Camping World's "inadequate controls and true financial health," the shares lost about 60% of their value.

Camping World has also been plagued by weak pricing and demand for recreational vehicles.

CWH Chart

CWH data by YCharts.

This is at least the second investor lawsuit filed against Camping World. Last October, an investor filed in Illinois federal court seeking class action status, accusing Lemonis and other company officials of misstating Camping World's financial health while selling down their stakes.

Camping World went public in October 2016 but is still controlled by Lemonis and private equity firm Crestview Partners.

Now what

Camping World had no immediate comment on the latest suit, but last fall when the Illinois lawsuit was filed, Lemonis told Crain's Chicago Business, "I can tell you that it will be defended vigorously."

I wouldn't assume that the market's quick turnaround following the news of the lawsuit is a judgment on the merits of the case. Given how far the stock has already dropped, it's possible that investors aren't all that worried about what might become of Lemonis and his team.

Shares of Camping World are up 26% year to date, thanks to optimism surrounding the company's plan to streamline operations, reduce retail inventory levels, and bring down capital expenditures in order to generate increased free cash flow. The company is also going to need to see a rebound in demand for RVs if it expects to come close to returning to previous highs. At least on Thursday, investors seemed more focused on the company's operations than on litigation.