As I have documented on this site, along with the rapid rise of SPAC-related transaction activity has come a surge in SPAC-related litigation. In the following guest post, Paul R. Bessette and Chris Crawford consider the likelihood for even further litigation relating to SPAC transactions and review the steps that well advised companies involved in SPAC transactions can take to try to reduce their litigation risks. Paul is co-chair of the King & Spalding law firm’s Corporate & Securities Litigation Practice and Chris is a Senior Vice President and Client Executive with Marsh in Los Angeles. A version of this article was previously published in Westlaw Today, 2021 WL 1990398. I would like to thank Paul and Chris for allowing me to publish their article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Paul and Chris’s article.
Continue Reading Guest Post: SPACs and SPAC-Related Litigation: A Primer on Reducing Litigation and Enforcement Risk
A cybersecurity incident earlier this year at the technology company Ubiquiti has given rise to a securities class action lawsuit against the company and two of its executives. The lawsuit is the latest example of the D&O risk exposure relating to cybersecurity. As discussed below, the lawsuit’s allegation illustrates that the way that a company handles bad news can be an important litigation risk factor. A copy of the May 19, 2021 securities lawsuit complaint against Ubiquiti can be found 
In the latest securities class action lawsuit involving a company that recently became publicly traded through a merger with a SPAC, a biodegradable plastics company and certain of its directors and officers have been hit with securities suit following media reports questioning the company’s claims about the biodegradability of its products. The company, Danimer Scientific, is one of several recently sued companies that completed a SPAC merger in December 2020. A copy of the May 14, 2021 complaint against Danimer can be found 
In the latest example of a company that went public through a recent merger with a SPAC getting hit with a securities class action lawsuit, a plaintiff shareholder has filed a securities suit against plastics recycler PureCycle Technologies, certain of its executives, and the former chairman of the company’s SPAC merger partner. Like many of the recent SPAC-related securities lawsuit filings, this new lawsuit followed shortly after the publication of a highly critical short-sellers report. A copy of the plaintiff’s complaint can be found 
In the latest SPAC-related securities class action lawsuit filing, a plaintiff shareholder has initiated a securities suit against Skillz, Inc., an online gaming platform that in December 2020 merged with Flying Eagle Acquisition Corp. (FEAC), a publicly traded special purpose acquisition company (SPAC). The share price of the post-merger publicly traded company declined after short sellers issued reports questioning the company’s revenue recognition practices and other financial details. The lawsuit followed after the share price decline. The individual defendants named in the securities complaint include the former President of FEAC, who became a director of Skillz following the merger. A copy of the plaintiff’s May 7, 2021 complaint can be found 
A federal district judge has denied the defendants’ motion to dismiss in a securities class action lawsuit arising out of an electric utility’s eight-year involvement in a domestic bribery scheme. The court’s ruling has several interesting features relating to the securities litigation exposures from domestic corruption. Northern District of Illinois Judge Virginia M. Kendall’s April 21, 2021 opinion in the Exelon Corporation securities suit can be found here. An April 28, 2021 memo about the ruling from the Shearman & Sterling law firm can be found 
In what is a notable development in the emerging SPAC-related securities class action litigation scene, the parties to a SPAC-related securities suit involving the streaming media company Akazoo company have reached a partial settlement in the aggregate amount of $35 million. The deal is a partial settlement because claims remain pending against other defendants. As discussed below, the settlement has a number of interesting features. It is, in any event, a noteworthy data point for the discussion about SPAC-related litigation exposures.
Readers of this blog know that there have been several SPAC-related securities class action lawsuits filed in 2021, with the suits mostly coming in after the de-SPAC transaction has been completed. Even readers who think they get the idea already will want to be sure to take a look at the new SPAC-related lawsuit that came in earlier this week. What makes this one different is that, though the lawsuit names both the SPAC and the SPAC merger target company as defendants, the merger, though announced, has not yet even taken place. And, mind you, this is not your garden variety merger objection lawsuit, it is a full blown 10b-5 class action lawsuit. Interested? Read on.
As I have noted in recent blog posts, there have already been several securities class action lawsuits filed this year related to the current wave of SPAC activity. These recently filed lawsuits have only just been filed and have not yet made their way to the dispositive motion stage. However, there are also other earlier-filed SPAC-related lawsuits pending, involving SPAC-related transactions that preceded the current SPAC wave. One of these earlier filed securities lawsuits involves Alta Mesa Resources, a company that collapsed within the first year after it was formed in a 2018 merger with a SPAC. On April 14, 2021, Southern District of Texas Judge