RCI Hospitality Holdings, Inc. (RICK) Accused of Hiding Related Party Transactions
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between February 14, 2018 and May 10, 2019, since 2017, RCI Hospitality Holdings, Inc. (RICK) had been affirming its past financial results and claimed to have been fully disclosing all related party transactions. On December 11, 2018, RCI Hospitality 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, it 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 Hospitality 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 not be able to file its quarterly report. On this news, RCI Hospitality’s share price fell over 7% to close at $20.48 per share on May 13, 2019, and continues to decline.