One of the significant trends over the last several years contributing to the overall total volume of securities class action lawsuit filings has been the relative prevalence of securities suits related to SPACs and post-SPAC merger companies. Even though it has now been a considerable amount of time since the SPAC IPO frenzy peaked in the first half of 2021, the lawsuits relating to SPACs and post-SPAC-merger companies continue to be filed. In the latest example of this phenomenon, last week a plaintiff shareholder filed a securities class action lawsuit against the vertical aviation company Archer Aviation and certain of its directors and officers. Archer became a publicly traded company through a September 2021 merger with a SPAC. As discussed below, the new lawsuit against Archer has certain features in common with many of the previously filed SPAC-related lawsuits. A copy of the complaint filed against Archer Aviation can be found here.


Atlas Crest Investment Corp. was a special purpose acquisition company (SPAC) that completed an IPO on October 27, 2020. In February 2021, Atlas announced its plans to merge with Archer Aviation. Archer designs and develops electric vertical takeoff and landing (eVTOL) aircraft. The two firms completed their merger on September 16, 2021.

According to the subsequently filed complaint, since its inception, Archer consistently touted the efficacy of its eVTOL aircraft design and flight testing procedures, the profitability of its business partnerships, and its ability to secure from the Federal Aviation Administration (FAA) the necessary regulatory certifications for the mass production of aircraft for commercial use.

However, on August 16, 2023, short-seller Grizzly Research released a report that among other things claimed that Archer relied on heavily edited videos to misrepresent the amount of flight testing the company had actually performed and to misrepresent the sophistication of Archer’s eVTOL aircraft. The report also claimed that Grizzly had confirmed through various interviews that Archer conducts far fewer flights than the company claimed. Finally, the report also claimed that Archer had misrepresented the timelines for its San Jose facilities to become operational and for the company to secure FAA approval for its prototype aircraft. According to the complaint, the company’s share price declined almost 7% on this news.

The Complaint

On September 21, 2023, a plaintiff shareholder filed a securities class action lawsuit in the Northern District of California against Archer and certain of its current and former officers. The complaint purports to be filed on behalf of a class of persons who purchased securities of the company between September 17, 2021 (the day that Archer’s shares began trading publicly following its merger with the SPAC) and August 15, 2023 (the day the short-seller report was published).

The complaint alleges that during the class period the defendants made false or misleading statements or failed to disclose that: “(i) the Company relied on heavily edited videos of earlier flights to exaggerate the amount of flight testing it had actually performed and the sophistication of its eVTOL aircraft; (ii) the Company had misrepresented the nature and profitability of its business partnerships; (iii) the Company was unlikely to secure FAA certification in the timeframe it had represented to investors, thereby delaying the start of mass production of its aircraft for commercial sales; (iv) accordingly, the Company had overstated its financial position and/or its prospects; (v) all of the foregoing once revealed, was likely to subject the Company to significant financial and/or reputational harm; and (vi) as a result, the Company’s public statements were materially false and misleading at all relevant times.”

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the plaintiff class.


Since January 1, 2021, SPAC-related securities litigation has been an important factor in the overall number of securities lawsuit filings, and even though the pace of these filings has slowed in calendar year 2023, the SPAC-related suits remain an significant contributing factor in the total number of suits filed this year. Since January 1, 2021, there has been a total of 64 SPAC-related securities lawsuit filings, of which ten have been filed so far this year. (By way of comparison, there was a total of 23 SPAC-related securities suits filed in 2022, with 19 of those suits being filed through September 25, 2022).

Among the features that this new lawsuit has in common with many of the previously filed SPAC-related securities suits is the central importance to the lawsuit’s claims of allegations against the company first raised in a short-seller report. By my count, at least 24 of the defendant companies hit with lawsuits out of the 64 total filed (representing about 37.5% of all SPAC-related suit filings) have involved allegations first raised in a short seller reporting published prior to the litigation filing.

It is noteworthy that a substantial amount of time has elapsed since this company completed its merger with the SPAC. It could reasonably be argued that this lawsuit has relatively little do with the fact that at an earlier time the company became publicly traded as a result of a merger with a SPAC. More to the point as time goes by, it will increasingly less relevant for de-SPAC companies that at an earlier time the companies merged with a SPAC. This impact of the passage of time will become particularly significant with respect to the SPAC mergers (like this one) that took place during the overall SPAC frenzy at the end of 2020 and the beginning of 2021. In other words, it seems likely that overtime the SPAC-related litigation phenomenon will eventually play itself out over time.

All of that said, the recent filing of this lawsuit shows that at least for now the SPAC-related securities litigation phenomenon continues, and the number of SPAC-related filings continues to be an important factor in the overall total number of securities lawsuit filings.