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Whistleblower Allegations Timeline

May 25, 2016 – MTY pays $394.2 million in part for Cold Stone, which has been the company’s number one concept ever since.

June 19, 2016 – Forbes publishes an article critical of MTY’s purchase, in part, based on Cold Stone’s store closures.

December 19, 2019 – We imaged Cold Stone’s data posted to indicating the company had 315 international locations at the end of 2019. (It appears that Cold Stone is responsible for updating this information.) It also indicated that the company had closed more stores than it opened throughout the globe, contradicting MTY CEO Eric Lefebvre’s February 24, 2020 statement below. Around the same time, we imaged Cold Stone’s Franchise Times webpage, which corroborated the international total and the global decline in locations on the year.

January 2020 – Our attorney reported well over 100 whistleblower allegations to MTY on many different topics. Most related to potential U.S. Federal Trade Commission (FTC) violations.

February 13, 2020 – A U.S. attorney speaking on behalf of MTY responded and acknowledged receipt and review of the whistleblower allegations. The attorney also warned of potential legal consequences if we published the allegations.

February 14, 2020 – MTY issued a press release announcing the postponement of its fourth quarter results based on allegations by a “whistleblower employee”. Negative media followed which caused the stock to tumble “as much as 13%, its biggest intraday decline [at the time] since October 2005”. The investment community expressed concerns and criticized the lack of transparency by MTY.

February 23, 2020 – On a Sunday afternoon, MTY announced it would issue its Q4, 2019 results at 6:00AM the following morning and hold its postponed investor conference at 8:30AM.

February 24, 2020 – Prior to the market opening, MTY issued a press release quoting Gary O’Connor, Chairman of the Audit Committee, claiming the board of directors had investigated the whistleblower allegations and would not make any additional comments beyond its release. The press release contained the following false statements about allegations.

  1. They were made by an “active employee”.
  2. They were “baseless”.
  3. They were previously “evaluated and dealt with”.

February 24, 2020 – During the MTY investor conference, in response to questions regarding the pace of Cold Stone’s closures, Lefebvre stated, “[O]bviously, there’s always going to be more store openings than more store closures for Cold Stone just because it’s such a big brand…. [T]hings are going to go well”. Lefebvre also repeatedly stated it would pause its focus on acquisitions to prioritize stabilizing franchisee profitability.

February 24, 2020 – After MTY, Lefebvre and O’Connor’s false statements to investors in response to the whistleblower allegations, MTY’s stock soared 9% in trading on the good news. This was despite that Restaurant Brands International Inc., MTY’s nearest competitor, and the market were -1.6% and -2.0%, respectively, and analysts were underwhelmed with MTY’s results. Therefore, it appears that investors were relying on the February 24, 2020 communications by MTY, Lefebvre and O’Connor that all is well.

February 13, 2020 – March 18, 2020 – MTY’s stock fell from $59.73 on February 13, 2020—the day before the company announced the whistleblower allegations—to a low of $16.58 on March 18, 2020. Shareholders lost nearly $1.1B in value. (Some investors may be inclined to attribute these losses to COVID. However, we estimate that, depending on when those investors sold their holdings, as much as more than half of that loss may have been due to the negative consequences and MTY’s struggles to recover resulting from management and board’s handling of the whistleblower allegations.) These losses occurred after investors had the opportunity to rely on MTY, Lefebvre and O’Connor’s false statements.

March 9, 2020 – Forbes published a second article that questioned the truthfulness of statements made to investors by MTY, Lefebvre and O’Connor regarding the whistleblower allegations. Again, the stock plummeted.

March 27, 2020 – Cold Stone published its 2020 federal disclosures mandated by the FTC. The document included numerous changes directly on point with whistleblower allegations denied by MTY, Lefebvre and O’Connor indicating a cover up. In addition, Cold Stone claims it increased its total international locations to 341 stores in 2019. (Based on the December 19, 2019 events above, we believe Cold Stone’s U.S., international and global locations declined. For reasons discuss on in the cover up webpage and for other reasons, we strongly believe that Cold Stone’s claim of 341 international locations, albeit, in a federal document, is intentionally and grossly overstated. We believe the same applies to federal disclosures during prior years.)

MTY Food Group Executives & Other Photos