According to an article dated January 31, 2008, on January 8, 2008, BUCA Inc., a Minneapolis-based company that operates the Buca di Beppo chain of Italian restaurants, has agreed to pay $1.6 million to settle allegations that the company engaged in securities fraud. The case, which had been dismissed without prejudice by the district court, was on appeal to the Eighth Circuit. The settlement proceeds will be paid by BUCA's insurance carrier.
On August 30, 2007, the Court entered the Order signed by U.S. District Judge Donovan W. Frank granting the motions to dismiss the Second Amended Consolidated Complaint with prejudice. The next day Judgment was entered. On September 25, 2007, the Plaintiff filed a Notice of Appeal. The appeal is currently pending in the U.S. Court of Appeals for the Eighth Circuit.
On December 18, 2006, the plaintiffs filed a Second Amended Consolidated Complaint. On February 26, 2007, the Defendants filed various motions to dismiss the Second Amended Consolidated Complaint.
According to the Company’s FORM 10-Q For the Quarterly Period Ended September 24, 2006, three virtually identical civil actions were commenced against the company and three former officers in the United States District Court for the District of Minnesota between August 7, 2005 and September 7, 2005. The three actions have been consolidated. The four lead plaintiffs filed and served a Consolidated Amended Complaint (the “Complaint”) on January 11, 2006. The Company filed a motion to dismiss the Complaint, which was granted on October 16, 2006. The Court has allowed plaintiffs 45 days to replead by filing a second amended complaint.
The original lawsuit alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, including U.S. Securities and Exchange Commission ("SEC") Rule 10b-5.
Buca is a Minneapolis-based company that owns and operates 107 restaurants around the country. The complaint alleges that the defendants issued false and misleading financial statements throughout the Class Period. During that time, according to the complaint, the Company materially overstated its income (or understated its losses), overstated its revenues, lacked adequate internal controls, and failed to follow generally accepted accounting practices.
Beginning in February 2005, Buca issued a series of news releases and SEC filings that disclosed these facts to the investing public, triggering a decline in the Company's stock price, the complaint says.
Among other facts, the complaint alleges that: * On February 7, 2005, Buca announced that the SEC had ordered an investigation to determine whether the Company had violated securities laws. * On February, 11, 2005, the Company disclosed in an SEC filing that it had "incorrectly applied the accounting rules with respect to certain operating lease transactions." As a result, the company said, it planned to restate previously filed financial statements. * On March 11, 2005, the Company issued a news release saying it would notify the SEC it was delaying its fiscal year 2004 annual report. * On March 16, 2005, Buca announced the dismissal of two top executives. * On July 25, 2005, Buca filed a complaint against two former executives alleging, among other things, that the former executives took secret cash payments from vendors and misappropriated Company assets by having the Company pay for their personal travel and vacations.
Finally, on July 25, 2005, according to the complaint, the Company restated certain of its financial results -- reducing income by approximately $20 million over fiscal years 2000 through 2003 -- and stated that it was taking "remedial measures" to correct material weaknesses in its "system of internal control over financial reporting."