Securities Litigation

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As I have previously noted, plaintiffs’ lawyers have over the last several months filed a plethora of securities class action lawsuit against companies that became publicly traded through a merger with a Special Purpose Acquisition Company (SPAC). Since these cases have only just been filed, few of the cases have yet reached the initial pleading hurdles. However, in a ruling last week, Central District of California Judge Christina A. Snyder denied in part the defendants’ motion to dismiss the securities suit pending against electric vehicle company Faraday Future Intelligent Electric, Inc., which became a public company through a June 2021 merger with a SPAC. As discussed below, the ruling may have significance for a number of the recently filed SPAC-related securities suits. A copy of Judge Snyder’s October 20, 2022 order can be found here.
Continue Reading Court Denies in Part Motion to Dismiss SPAC-Related Securities Suit Against EV Company       

The payment technology firm Block, Inc. (formerly known as Square) has been hit with a securities class action lawsuit related to the company’s announcement earlier this year that a former employee had improperly accessed and downloaded company customer data. The new lawsuit is the latest example of the ways in which data security incidents can translate into D&O claims. The complaint, filed on October 11, 2022, can be found here.
Continue Reading Payments Company Hit With Data Breach-Related Securities Suit

In the latest lawsuit to emerge in the aftermath of the recent SPAC frenzy, a plaintiff shareholder has filed a securities class action suit against Opendoor Technologies, a residential real estate digital platform, which merged into a publicly traded SPAC in December 2020. The SPAC involved was one of the many financial vehicles launched by the so-called “King of SPACS,” Chamath Palihapitiya, while the SPAC craze was picking up steam. A copy of the October 7, 2022 complaint can be found here.
Continue Reading SPAC-Merged Real Estate Platform Hit with Securities Suit

Readers of this blog know that in recent years, plaintiffs’ lawyers have filed a number of D&O lawsuits against companies that experience cybersecurity-related incidents. Overall, the plaintiffs’ track record on these cases is at best mixed, and a number of high-profile cases have been dismissed. In the latest example of the dismissal of a cybersecurity-related securities suit, the court in the Capital One Financial Corporation data breach-related securities class action lawsuit has granted the defendants’ motion to dismiss. The September 13, 2022 dismissal order in the case can be found here.
Continue Reading Capital One Data Breach-Related Securities Suit Dismissed

In the midst of its battles with Elon Musk over Musk’s attempt to walk away from his proposed takeover of the company, Twitter was rocked by the news that a whistleblower had sent Congress and federal agencies explosive reports of “major security problems” at the company. According to the news reports, the whistleblower’s disclosure not only detailed privacy and cybersecurity vulnerabilities at Twitter, but also included allegations that company management had misled its own corporate board and government regulators about the vulnerabilities. Among other things, these revelations triggered a Congressional inquiry. And now, a plaintiff shareholder has launched a securities class action lawsuit against the company and several of its executives, based on the whistleblower’s allegations. As discussed below, the complaint has several interesting features.
Continue Reading Twitter Hit with Cybersecurity-Related Securities Suit Over Whistleblower Allegations

In the latest SPAC-related federal court securities class action lawsuit to be filed, a plaintiff shareholder has filed a securities suit against a building management technology company – which merged with a SPAC in 2021 — that recently restated its financial statements for the reporting periods after the company became publicly traded. The complaint in the new lawsuit filed against Latch, Inc. can be found here. As also noted below, in a separate development, a different plaintiff shareholder has filed a separate SPAC-related Delaware Chancery Court action against former directors and officers of a SPAC and the SPAC’s sponsor.
Continue Reading SPAC-Related Securities Suit Filed Against Building Technology Company

Although the filing of SPAC-related securities lawsuits has been one of the important securities litigation stories so far this year, the filing this past week of yet another SPAC-related securities suit did highlight the fact that it is the first SPAC-related securities suit to be filed since late May. As discussed further below, there may be some reasons for this apparent lull in SPAC-related securities suit filings over the last several months. However, the recently filed suit, as also discussed below, at the same time arguably underscores the fact that it is entirely possible that the apparently lull in filings between May and August was purely coincidental and that we are likely to see continued numbers of SPAC-related securities suit filings as the year progresses.
Continue Reading Online Lottery Company Hit with First SPAC-Related Securities Suit Filing Since May

One of the more distinctive litigation phenomena over the last several years has been the series of securities lawsuits filed against companies related to the opioid crisis. Plaintiffs’ attorneys have filed securities suits against opioid manufacturers, distributors, and even retailers. While a number of these lawsuits have resulted in settlements, several of them have also been dismissed. In the latest opioid-related securities suit to result in a dismissal, on August 17, 2022, the judge presiding over the opioid-related litigation pending against Endo International in the District of New Jersey granted the defendants’ motion to dismiss with prejudice. Although the dismissal is significant, there is more to be taken into account when assessing the opioid-related corporate and securities lawsuits.
Continue Reading Court Dismisses Opioid-Related Securities Suit

Late last month, when Cornerstone Research released its report on securities class action lawsuit filings in the year’s first six months, it noted that an important first half development was the significant number of suits filed against cryptocurrency and other digital asset-related companies. The recent rise in the number of crypto-related securities suits undoubtedly is related at least in part to the turmoil in the marketplace for digital assets. Last week, the cryptocurrency exchange Coinbase became the latest digital asset company to get hit, as a plaintiff shareholder filed a securities class action lawsuit against the company and certain of its directors and officers. A copy of the complaint can be found here. In addition to the securities lawsuit, the same day a separate plaintiff shareholder filed a shareholder derivative lawsuit against the company as well. The derivative lawsuit complaint can be found here.
Continue Reading Coinbase Hit with New Securities Suit and Derivative Suit

According to the latest statistics from SPACInsider, there are currently over 580 SPACs seeking merger partners. Financial media reports have already speculated that many of the searching SPACs may not find a suitable merger partner within the applicable search period. One concern from this combination of circumstances is that some SPACs may feel pressure to do whatever they have to do to complete a deal, any deal. As I have noted in prior posts, deals completed under these kinds of circumstances can later subject the SPAC managers to scrutiny and perhaps even litigation.

In a Delaware Chancery Court lawsuit brought by former public shareholders of a SPAC against the former directors and officers of the SPAC and others alleging that the SPAC officials, in their push to complete a deal, misrepresented the target company as a U.S.-based manufacturer of electric vehicles, when, the plaintiff shareholders allege, the company was in fact just a vehicle dealer that buys Chinese electric vehicles that the company rebrands as its own. As discussed below, this new lawsuit may illustrate one of the kinds of circumstances in which many of the currently searching SPACs could fall.
Continue Reading SPAC Execs Allegedly Misrepresented Target Company’s Business to Complete Deal