Former McDonald’s CEO Charged with Lying to Investors

When Stephen Easterbrook was first fired from his position as CEO of McDonald’s, the firing was listed as “without cause,” which allowed Easterbrook to keep his severance pay, including shares in the company. But that was before McDonald’s found out about the extent of Easterbrook’s alleged misconduct.

At the time he was fired, Easterbrook allegedly denied having any inappropriate relationships with any of his employees, except for one relationship, which he claimed had not been physical. Afterwards, an internal investigation found emails that allegedly revealed Easterbrook’s sexual relationships with multiple McDonald’s employees during his time as CEO. Once these emails were uncovered, the company sued Easterbrook in 2020.

The lawsuit resulted in Easterbrook returning his shares in the company, as well as cash, the combined value of which was about $105 million at the time he returned it.

Now the Securities and Exchange Commission (SEC) is charging Easterbrook with lying to and misleading investors by failing to disclose the extent of his romantic relationships with his employees.

“When corporate officers corrupt internal processes to manage their personal reputations or line their own pockets, they breach their fundamental duties to shareholders, who are entitled to transparency and fair dealing from executives,” said Gurbir S. Grewal, the SEC’s director of the enforcement division.

Essentially, since Easterbrook’s sexual relationships had the potential to influence the way he and/or his employees did their work, the result may not have been in the investors’ best interests.

This is especially true since Easterbrook failed to disclose the nature of the personal relationships he was having with his employees. Not only is that an inexcusable lack of transparency, but it also shows he knew those relationships weren’t exactly above board.

The SEC has fined Easterbrook $400,000 for violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.

McDonald’s was also charged for failing to disclose the real reason Easterbrook was fired in 2019. But because the company has cooperated with the SEC in its investigation, it is not being fined.

McDonald’s released a statement saying it had held Easterbrook responsible for his actions. But neither Easterbrook nor McDonald’s has responded to the SEC’s charges, either to admit or deny their findings. McDonald’s and Easterbrook have agreed to a cease-and-desist order, which prohibits Easterbrook from holding office as a corporate officer or director in the company for five years.

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