The complaint charges Cosi, certain of its officers and directors, and William Blair & Co., the lead underwriter for the IPO, with violations of federal securities laws. Among other things, plaintiff claims that defendants issued a materially false and misleading Registration Statement and Prospectus in connection with the IPO. Specifically, the plaintiff alleges that the Company misrepresented its ability to use the IPO proceeds to open 53 to 59 restaurants in 2003.
On February 3, 2003, less than 3 months after the offering, the Company announced that rather than opening the 53 to 59 new stores, that Cosi expected to open no more than 10 Company-owned restaurants in 2003. The Company also announced that it had changed its business strategy disclosed in the Prospectus. Instead of growing through opening Company-owned stores, the Company would grow through franchising. In reaction to the disclosure, the price of the stock dropped by more than 30%, falling to $3.10 per share. As a result of defendants' false and misleading statements in the complaint, the complaint alleges that Cosi's common stock was overpriced in the offering and in the aftermarket until February 3, 2003.
The plaintiff seeks to recover damages on behalf of all purchasers of Cosi common stock during the Class Period. He is represented by the law firm of Barrack, Rodos & Bacine.