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Another Choice Offering from Wall Street: A Doughnut with 11-25 Grams of Fat from a Company Awash in Red Ink with a Checkered Accounting History

Courtesy of Pam Martens

Krispy Kreme Doughnut, Chocolate Iced Glazed with Sprinkles

Krispy Kreme Doughnut, Chocolate Iced Glazed with Sprinkles

A preliminary prospectus has been filed with the SEC to bring Krispy Kreme, the doughnut retailer, back to trade in U.S. public markets. JPMorgan, Bank of America and Citigroup will be three of the four Lead Book-Running Managers on the deal according to the preliminary prospectus. Those same three Wall Street underwriters have the distinction of just last week being banned from participating in a big European Union bond offering because of their past cartel activity in Europe. Morgan Stanley is to be the fourth Lead Book-Running Manager on the deal.

Krispy Kreme’s net losses have been escalating over the past three years according to its SEC filing. Net losses in 2020 were $60.9 million; $34 million in 2019; and $12.4 million in 2018.

During the company’s prior history as a publicly-traded company, the Securities and Exchange Commission charged the company with doctoring its earnings, ruling as follows in 2009:

“Between approximately February 2003 and May 2004, Krispy Kreme fraudulently inflated or otherwise misrepresented its earnings for the fourth quarter of its 2003 fiscal year, which ended on February 2, 2003, and each quarter of its 2004 fiscal year, and its full year results for fiscal 2004, which ended on February 1, 2004. By this misconduct, the Respondent avoided lowering its earnings guidance and improperly reported for each of those quarters what had become a prime benchmark of its historical performance, i.e., reporting quarterly earnings per share of common stock (EPS) that exceeded its previously announced EPS guidance by one cent.”

The company’s former CEO, COO and CFO were fined in the matter by the SEC without admitting guilt.

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