April 3, 2019

$20 million settlement reached in securities class action against California restaurant chain

Purchasers of El Pollo Loco Holdings, Inc. securities between May 15, 2015 and August 13, 2015 filed a class action on August 24, 2015 in US District Court for the Central District of California against the company and several of its officers and controlling shareholders.  The plaintiffs claimed that the defendants violated §§10(b), 20(a) and 20A of the Exchange Act, 15 USC §§78j(b), 78t(a) and 78t-1, and Rule 10b-5, 17 CFR §240.10b-5 by failing to disclose the financially disastrous results of the California fast food chain’s February 2015 price increases and menu changes, by falsely assuring investment analysts that factors other than the price increases and menu changes were driving the lower than expected growth results, and by selling over $132 million of their personally-held stock before disclosing the true factors causing the downturn.  

The complaint was dismissed twice without prejudice before being allowed to go forward, and was followed by voluminous and lengthy discovery.  The proposed settlement of $20 million has been stipulated by the parties without admission of wrongdoing or liability, and awaits approval by the court. 

Stipulation of Settlement | Complaint