Freshpet Executives Under Investigation for Potential Breaches of Fiduciary Duties
Schubert Jonckheer & Kolbe LLP has launched an investigation into whether certain officers and directors of Freshpet, Inc. (NASDAQ: FRPT) breached their fiduciary duties by causing the company to issue false and misleading statements related to the company’s challenges with retailers and manufacturing problems. Freshpet manufactures and markets refrigerated meals and fresh foods for dogs and cats.
The investigation concerns the company’s failure to disclose key challenges with its branded refrigerators from April 1, 2015 to November 11, 2015. Freshpet’s growth strategy was directly linked to its ability to install new refrigerators containing its pet food products in retail stores. During this time, the company faced substantial obstacles that impeded the growth of its refrigerator placements, yet it misleadingly suggested to shareholders that its rate of growth was on track with projections. When the truth was revealed to the public in November 2015, Freshpet’s stock plummeted and the company was downgraded by several analysts.
On April 21, 2016, a federal securities action was filed against the company and certain officers and directors. On January 12, 2018, the Hon. Madeline Cox Arleo denied Freshpet’s motion to dismiss, allowing the litigation to proceed. The Court found that plaintiffs in the action adequately alleged that Freshpet, “mislead investors by suggesting that Freshpet was able to continue to place Fridges at the same rate of growth as it had experienced between 2011 and 2014, when Defendants knew by early 2015 that Freshpet was facing substantial obstacles that would impede the growth of its Fridges.”
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