MGP actions ‘poorly handled’ but not fraud, rules judge
A court has dismissed a lawsuit brought against MGP Ingredients by investors who claimed the company had misled them about the business’ health.
Various pension funds and retirement systems that bought shares in US contract distiller MGP Ingredients brought the case forward.
They alleged that former CEOs David Colo and David Bratcher, and CFO and interim CEO Brandon Gall, had known “adverse facts” about the business that were “actively concealed from the investing public”.
However, a judge has now dismissed the case, ruling that the plaintiffs had failed to adequately demonstrate that MGP’s executives had violated securities laws.
Instead, he said: “The non-fraudulent inferences proposed by defendants are more compelling.
“Given the corporate structure, business practices, compensation schemes of MGPI, and the actions of the individual defendants, it is far more likely that defendants poorly handled quickly changing circumstances and market conditions affecting their business.”
The conditions in question surround the firm’s Distilling Solutions arm, which produces Bourbon, rye and other American whiskeys for third-party customers and accounted for more than half of its revenues in 2022 and 2023.
The plaintiffs alleged MGP ramped up production during pandemic demand, but continued producing at high levels even as consumption began to normalise. The plaintiffs claim the company failed to disclose the resulting build-up in inventory and weakening demand to investors.
In October 2024, MGP lowered its earnings expectations for the full year and acknowledged that elevated inventory was putting pressure on the business. Following the announcement, the company’s stock price fell sharply.
Julie Francis became CEO in July 2025 and is not addressed in the dismissed lawsuit.
In its most recent financial results, MGP Ingredients saw sales drop by nearly a quarter.
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