Financing

The FTC fines Biglari Holdings $1.4M over ‘grossly negligent’ Cracker Barrel stock purchase

It was the investor’s second such fine for violating antitrust laws related to the reporting of stock purchases by large existing shareholders.
Cracker Barrel Sardar Biglari fine
Photograph: Shutterstock

The U.S. Federal Trade Commission has fined Biglari Holdings $1.4 million for its second violation of federal antitrust rules in less than a decade over purchases of Cracker Barrel stock.

In this case, the FTC has taken issue with purchases made in 2020 by a pair of Biglari Holdings subsidiaries, First Guard Insurance and Southern Pioneer Property and Casualty Insurance Company.

The two subsidiaries acquired 55,141 shares of Cracker Barrel in March 2020. At the time, Biglari Holdings held 2 million shares of the family dining chain through the hedge fund owned by the company’s CEO, Sardar Biglari.

Because of the extensiveness of Biglari’s ownership of Cracker Barrel stock, federal antitrust rules require the investor to file with federal agencies and observe a waiting period before consummating the purchase.

Federal regulators noticed the violation, and in June of 2020 Biglari Holdings corrected the error.

Yet, according to the FTC, this was Biglari Holdings’ second such violation regarding the purchase of Cracker Barrel stock. Biglari was fined $850,000 in 2012 for violating disclosure rules on purchases of Cracker Barrel shares his company made a year earlier.

“Biglari claimed that it was unaware of the requirement to aggregate its current holdings when making an acquisition to determine the size of the transaction, which even if true, is grossly negligent,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement.

The rules for aggregating holdings of stock have been in place since 1978. They are generally designed to give the FTC time to investigate and approve such transactions and to prevent creeping takeovers of companies by investors who buy stock through multiple subsidiaries.

Biglari has been among the biggest Cracker Barrel shareholders for more than a decade. He is currently pressing the company to start paying dividends and has been critical of bonuses paid to its executives and of their investments in ancillary concepts. Biglari Holdings is the owner of the burger chain Steak n Shake. 

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