HOUSTON--Rick's Cabaret International, Inc. said today that it is not a part of and has no knowledge of any investigation by the U.S. Attorney's office in Brooklyn into alleged manipulation by organized-crime families of the stocks of more than a dozen companies, including its own.
Eric Langan, President and CEO of Rick's Cabaret posted a Letter to Shareholders on the company's website over the weekend, as follows:
"On Thursday the Dow Jones News Service, The Wall Street Journal and New York Post carried stories about an indictment of some organized crime figures over an alleged stock manipulation scheme. The Post story seems to say that this alleged scheme took place in the late 1990s and 2000, but none of the stories made clear when it purportedly occurred. According to the Journal, one of the stocks mentioned in the indictment as having been manipulated was Rick's Cabaret. We know nothing about these allegations and have had no contact with the Department of Justice or anyone else on this matter.
"After the close of market on Friday, the Associated Press carried a story that tried to link our Friday stock performance to the federal indictment. An initial AP story stated, falsely, that we were somehow a part of the investigation, implied that the alleged activities were recent and stated that the indictment was the reason for a pricing pullback on Friday. We immediately called AP to protest and issued a statement to the wire service as follows: 'We have never heard of any of the people named in this reported Justice Department indictment, we have no relationship with any of them, and we know nothing about these allegations. The first we ever heard of these charges was when we read about them in The Wall Street Journal. Our stock trades in an orderly and transparent fashion and has done so for many years.'
"The AP issued a new story that carried my statement and also pointed out that we 'were not accused of any wrongdoing.' However, the AP included a wild, unsubstantiated headline that said our shares had 'fallen on manipulation scheme.' The AP seems to have violated the most fundamental principle of good journalism - be accurate and get a source for your story before you publish it. The sensationalist headline is absolutely false and obviously AP had no source, or else the story would have cited it.
"Our stock was down 45 cents at the close on Friday from a close of $6.20 the day before. My own belief is that the pullback in our share price on Friday was a natural market phenomenon following the rise this past week. At Friday's close, our shares were up 5.9% on the week and we are up 50% since the start of the year. There could be any number of reasons why our shares have been rising, but I believe that the market is recognizing that our steadily improving financial performance makes us a good investment. "
