The U.S. Securities and Exchange Commission has launched a formal investigation into Greenwood Village-based Red Robin Gourmet Burgers Inc., the chain said in a federal filing Thursday.
The company also said it has been sued in California for alleged labor-law violations unrelated to the SEC probe.
The SEC investigation centers on an internal company probe into former president and chief executive Michael Snyder’s use of company-chartered aircraft and travel and entertainment expenses.
The investigation led to Snyder’s retirement in August, and he was required to repay $1.25 million to the company.
Senior vice president James McClos key, the company’s former chief financial officer, also stepped down.
Dennis B. Mullen has taken Snyder’s place.
The SEC notified Red Robin of its investigation Wednesday, according to the filing.
“The company has cooperated with the SEC, and intends to continue to cooperate fully with the SEC in its formal investigation,” it said in a news release.
Red Robin vice president of marketing Kim McBee declined to comment further.
The company said in its filing that the SEC has not determined whether Red Robin has violated any laws. SEC associate regional director Don Hoerl declined to comment on the investigation.
In the California case, the company has been sued in state superior court for alleged failure to comply with wage and hour regulations.
The plaintiff in the proposed class-action suit also alleges that the company engaged in unlawful business practices and unfair competition.
In its filing, Red Robin said it “believes it has meritorious defenses to these claims and intends to defend the case vigorously.”
The dual announcements are another blow to Red Robin, which has struggled to regain its credibility following Snyder’s departure. Last month, the company’s stock took a hit when it warned that fourth-quarter results would fall short of expectations.
Shares of the company reached a 16-month low in January and have since regained only a small fraction of their value.
Red Robin shares closed at $41 Thursday but dropped by $1.62 in after-hours trading.
As of Dec. 14, the company operated 290 restaurants across the United States and Canada, including corporate-owned locations and those operating under franchise or license agreements. It employs 13,000 people.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
