Thursday, December 19, 2013

Chanticleer Holdings agrees to $850,000 settlement with investors

An $850,000 class-action settlement involving Chanticleer Holdings has been reached in a lawsuit filed by shareholders who claim the company misled them in documents for a public offering of stock.

According to a Wednesday court filing, Chanticleer’s insurer will pay $837,500 of the settlement amount. Chanticleer's accounting firm, Creason & Associates, which audited financial statements used in the stock offering, will pay the remaining $12,500.

The proposed settlement is subject to court approval.

The lawsuit was filed in federal court in Florida last year. It stems from a June 2012 offering of 2.4 million Chanticleer shares at $4.50 apiece.

The lawsuit claims offering documents contained false and misleading information about Chanticleer’s South African Hooters operation. The documents told investors that although Creason did not audit the financial statements of the South African unit other auditors had, the suit says.

Three months later, Chanticleer told the U.S. Securities and Exchange Commission that financial statements for the South African operations actually had not been audited. Following that disclosure, Nasdaq halted trading of the company’s stock, “rendering it nearly worthless,” the lawsuit says.

Additional terms of the settlement are being negotiated, according to court documents. Finalized settlement documents are expected to be drafted in the next 60 days.

“We are pleased to have reached this agreement in principal and hope to negotiate and finalize documents within the next 60 days,” Mike Pruitt, Chanticleer CEO, said in a statement Thursday.


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