SAN DIEGO & HOUSTON--(BUSINESS WIRE)--Shareholder rights law firm Robbins Arroyo LLP announces that a purchaser of RCI Hospitality Holdings, Inc. (NASDAQ: RICK) filed a derivative complaint against the company's directors and officers for breaches of fiduciary duty, unjust enrichment, waste of corporate assets, gross mismanagement, abuse of control, and violations of the Securities Exchange Act of 1934 from August 10, 2017 to the present. RCI is a holding company that operates live adult entertainment and restaurant and bar operations through its subsidiaries.
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RCI Hospitality Holdings, Inc. (RICK) Accused of Hiding Related Party Transactions
According to the derivative complaint, since 2017, RCI's directors and officers have affirmed its past financial results and claimed to have been fully disclosing all related party transactions. On December 11, 2018, RCI revealed that it would be unable to timely file its annual report due to delays in completing its financial statement audits. On this news, its share price fell almost 6%. On December 31, 2018, RCI filed its late annual report. However, its directors and officers failed to reveal that the company was engaging in numerous transactions with the CEO, including lending him significant sums of money, and disclosed that management had identified material weaknesses over revenues. In May 2019, RCI announced that the U.S. Securities and Exchange Commission had opened an informal inquiry into accusations made in the short-selling community, and as a result of the pending investigations, would be unable to file its quarterly report. On this news, RCI's share price fell over 7% to close at $20.48 per share on May 13, 2019, and continues to decline.
RCI Hospitality Holdings, Inc. (RICK) Shareholders Have Legal Options
Robbins Arroyo LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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