FAT Brands Inc.

Ticker: FAT, FATBB, FATBP, FATBW

Class Period Start: 12/04/2017

Class Period End: 02/18/2022

Registration Deadline: 05/17/2022

According to the lawsuit, FAT Brands Inc. purports to be a franchising company which acquires, develops, and markets quick-service, fast casual, and casual dining restaurant concepts including the brands of: Fatburger, Johnny Rockets, Twin Peaks, Fazoli’s, Buffalo’s Cafe, Buffalo’s Express, Ponderosa Steakhouse, Bonanza Steakhouse, Hurricane Grill & Wings, Yalla Mediterranean, and Elevation Burger.

On February 19, 2022, the Los Angeles Times published an article entitled “Family behind Fatburger under investigation for alleged fraud, money laundering, records show” which reported that federal authorities have been investigating FAT Brands’ chief executive “as part of an inquiry into allegations of securities and wire fraud, money laundering and attempted tax evasion, court records show.”

Thereafter, on February 22, 2022 before market hours, the Company disclosed in an SEC filing that the U.S. Attorney’s Office for the Central District of California and the U.S. Securities and Exchange Commission (SEC) have both “opened investigations relating to the Company and our Chief Executive Officer, Andrew Wiederhorn, and are formally seeking documents and materials concerning, among other things, the Company’s December 2020 merger with Fog Cutter Capital Group Inc., transactions between these entities and Mr. Wiederhorn, and compensation, extensions of credit and other benefits or payments received by Mr. Wiederhorn or his family.”

On this news, FAT Brands’ share price fell $2.42 per share, or 23%, to close at $8.14 per share on February 22, 2022, on unusually heavy trading volume, damaging investors.

The Complaint alleges Defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that:

  • the Company and certain executives engaged in transactions “for no legitimate corporate purpose”;
  • the Company ignored warning signs relating to transactions with certain executives;
  • as a result, the Company was likely to face increased scrutiny, investigations, and other potential issues; 
  • certain executives, who are touted as critical to the Company’s success, were at great risk of scrutiny—potentially, at least in part, due to the Company’s actions; 
  • the Company’s touted chief executive officer (CEO) and chief operating officer (COO) were under investigation regarding transactions with the Company; and
  • as a result, Defendants’ public statements were materially false and/or misleading at all relevant times.

On May 2, 2022, the Court issued an Order consolidating cases. All future docketing was ordered to be done in the lead case 22-CV-01820.

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