LOS ANGELES — Orange County businessman William P. Foley II was accused in a lawsuit filed Tuesday of illegally using insider information to acquire more than 8% of the company that controls the troubled Rally's Hamburgers Inc. chain.
The suit, filed in U.S. District Court in Los Angeles, also alleges that Foley, chairman of Irvine-based Fidelity National Financial Inc. and CKE Restaurants in Anaheim, failed to accurately report how much Giant Group Ltd. stock Fidelity National and Foley have acquired in recent months.
Los Angeles-based Giant also alleges that a group led by Foley is covering up its intention to try and gain control of Rally's by acquiring shares of Los Angeles-based Giant, which owns 48% of the burger chain.
Fidelity National Vice President and General Counsel Andrew Puzder dismissed the suit as "meritless. . . . The motivation for buying Giant stock is not to get Rally's. Fidelity's motives are very clear in the [Securities and Exchange Commission filing] we made earlier in the month."
A spokeswoman for CKE Restaurants, the parent company of the Carl's Jr. chain, said that she hadn't seen the suit, but understood that the company wasn't named as a party.
In a Dec. 8 SEC filing, Fidelity said it will take "a significant equity position" in Giant, and that it would not be a "passive investor."
Foley and his Irvine-based title insurance company have in the past taken stakes in several underpriced stocks. Fidelity recently ended an 18-month hostile bid for US Facilities Corp., a Costa Mesa-based health and medical insurance firm.
Fidelity's SEC filing notes that Los Angeles-based Giant has amassed $28.3 million in cash and $17.5 million in securities.