NEW YORK, June 10, 2024 (GLOBE NEWSWIRE) — Gainey McKenna & Egleston announces that a securities class action lawsuit has been filed in the United States District Court for the Central District of California on behalf of all persons or entities who purchased or otherwise acquired Fat Brands Inc. (“Fat Brands” or the “Company”) (NASDAQ: FAT, FATBB, FATBP, FATBW) securities between March 24, 2022 and May 10, 2024, inclusive (the “Class Period”). The lawsuit seeks to recover damages for the Company’s investors under the federal securities laws.
The Complaint in the lawsuit alleges that Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Complaint alleges that the Defendants failed to disclose to investors that: (1) Defendants failed to disclose that Andrew A. Wiederhorn, the Company’s Chairman and former CEO, had received improper payments from the Company, exposing Fat Brands to criminal liability and; (2) as a result, Defendants’ statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all times.
The Complaint further alleges that the truth emerged on May 10, 2024, when the United States Attorney’s Office for the Central District of California issued a press release entitled “Former CEO and Controlling Shareholder of Fat Brands Inc., Former CFO, and a Tax Advisor Indicted in Alleged Scheme to Conceal $47 million Paid to CEO in the Form of Shareholder Loans.” (the “Announcement”). The Complaint alleges that the Announcement specified that the indicted parties were Fat Brands itself, Andrew Wiederhorn (the former CEO and current controlling Fat Brands shareholder), Rebecca Hershinger (the former Fat Brands CFO), and William J. Amon (a one-time managing director of Andersen’s Los Angeles office, who provided tax-advisory services to Wiederhorn, Fat Brands, and Fog Cutter Capital Corporation, a former Fat Brands affiliate).
The Complaint also alleges that the Announcement stated that “Andrew A. Wiederhorn, the former CEO and current controlling shareholder of [Fat Brands], has been indicted on federal charges alleging a scheme to conceal $47 million in distributions he received in the form of shareholder loans from the IRS, FAT’s minority shareholders, and the broader investing public[.]” The Complaint further alleges that the Announcement stated that “Wiederhorn-assisted by FAT’s [CFO] and his outside accountant at advisory firm Andersen – concealed millions of dollars in reportable compensation and taxable income and evaded the payment of millions of dollars in taxes, while causing FAT itself to violate the Sarbanes-Oxley Act’s prohibition on direct and indirect extensions of credit to public-company CEOs in the form of a personal loan.”
The Complaint also alleges that on this news, the price of Fat Brands Class A common stock fell by $2.08 per share, or 27.73%, to close at $5.42 on May 10, 2024. Fat Brands Class B common stock fell by $2.02 per share, or 28.85%, to close at $4.98 on May 10, 2024. Fat Brands 8.25% Series B Cumulative Preferred Stock fell by $1.08 per share, or 7.24% to close at $13.82 on May 10, 2024. Fat Brands warrants fell by $1.05 per warrant, or 21.6%, to close at $3.80 on May 10, 2024.
Investors who purchased or otherwise acquired shares of Fat Brands should contact the Firm prior to the August 6, 2024 lead plaintiff motion deadline. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at tjmckenna@gme-law.com or gegleston@gme-law.com.
Please visit our website at http://www.gme-law.com for more information about the firm.
