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Chipotle shareholders file lawsuit against restaurant, claim insider trading

Posted: 12:10 PM, Jun 19, 2016
Updated: 2016-06-19 18:10:03Z

Some shareholders of Chipotle stock have filed a suit against the Mexican restaurant chain, saying that company executives awarded themselves “hundreds of millions” of dollars just before stock prices plummeted in response to an E. coli breakout, according to Colorado Public Radio .

In a suit filed in Denver District Court, shareholders claimed that executives sold “tens of millions” worth in stock while acting on insider information prior to a disease outbreak that left dozens of customers sick. The lawsuit also claims the company repurchased stock at the inflated price, costing investors an extra $84 million.

Chipotle’s stock has plummeted since last October, when reports began to emerge that people had gotten sick after eating at the restaurants. Virus outbreaks forced the closure of 43 stores in the northwest, and another 143 people contracted a norovirus after eating at a restaurant in Boston in December. Since that time, Chipotle’s stock has been devalued by nearly 50 percent.

 

 

The restaurant responded by closing all of its restaurants on Feb. 8 in order to discuss and review proper food handling procedures. Since then, Chipotle has attempted to win customers back by offering thousands of free burritos.

“Chipotle’s image of a company that serves fresh, healthy, high-quality and clean food may never revive,” the lawsuit states.

Alex Hider is a writer for the E.W. Scripps National Desk. Follow him on Twitter @alexhider.