Tasty Brands LP Broker Dealer Claim Investigation
LAS VEGAS, NV / ACCESSWIRE / December 6, 2024 / The Law Office of David Liebrader has opened an investigation into Tasty Brands LP, an investment holding company comprised of interests in Burger King and Pizza Hut restaurants. Tasty Brands was sold by broker dealers to retail clients in 2020 and 2021 in the midst of the Covid pandemic lockdowns.
Tasty Brands was formed to acquire interests in fast food restaurants, primarily Burger King and Pizza Huts on the east coast. The key selling feature was that investors' capital would be used to acquire the franchises, while income from operations would pay dividends or interest.
In fact, investors did not acquire interests in the restaurants themselves; their funds were used to purchase limited partnership shares, which then acquired interests in corporate subsidiaries that purchased the fast food outlets. Substantial loans were used for the purchases, and interest costs have hampered Tasty Brand's ability to pay dividends.
From the outset Tasty Brand's prospects for success were limited. The offering was made during the Covid pandemic while many restaurants were closed for in person dining. In fact, the company pointed out that the reduced foot traffic from the Covid lockdowns could force it to close some "or all" of its stores.
This bad news from the outset, coupled with crippling interest payments from loans used to acquire the stores should have been a red flag for any broker dealer. Instead, they focused on the touted 8-10% rate of return, despite Tasty Brands stating that distributions could be paid from investor capital, rather than income from successful operations.
In light of the substantial risks of selling an illiquid, overleveraged investment during Covid, it is surprising any broker dealer approved Tasty Brands for sale. Broker-dealers have a duty to investigate the securities they recommend, and the failure to do so subjects them to liability for violations of the securities laws. See Leandro Emerg. Med. Group Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, (2d Cir. 1996).
FINRA, which regulates the industry, requires broker dealers to conduct a vigorous investigation into investments they recommend. See FINRA Notice to Members 10-22. They are also required to conduct a "reasonable basis" and customer specific suitability analysis before recommending private placement investments to their clients. See NASD Notice to Members 03-71.
The Law Office of David Liebrader is actively pursuing claims for several investors who purchased Tasty Brands LP during the Covid pandemic, and who are now stuck with illiquid investments that havent paid distributions in years.
Our firm practices exclusively in the field of investment loss recovery. For the past 30 years, we have dedicated our law practice to assisting investors who have been victims of investment fraud. During that time we have received judgments, awards and settlements exceeding $100,000,000 for over one thousand clients.
If you purchased Tasty Brands LP and would like to discuss the matter to see if you might have legal recourse contact or call us for a free, confidential consultation at (702) 380-3131.
Contact Information
David Liebrader
Attorney
7023803131
Source: The Law Office of David Liebrader
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