As has been extensively noted on this site and elsewhere, the sheer level of SPAC-related action has been the one of the top business stories of the last few months. However, as I noted earlier this week, there have already been some distant early warning signs of possible problems on the SPAC horizon. Further developments this week suggest there could be growing trouble in SPAC-land. As discussed below, a newly released statement by the SEC about SPAC accounting potentially could cool off the hot market for SPACs, and a statement of intent by a leading plaintiffs’ firm raises the possibility of further SPAC-related litigation.
Continue Reading Trouble Brewing in SPAC-Land?

In the latest example of a post de-SPAC transaction electric vehicle company getting hit with a securities class action lawsuit, a plaintiff shareholder has filed a securities suit against Canoo, Inc. as well as against the former directors and officers of the SPAC into which Canoo merged in December 2020. The new lawsuit is one of many securities suits that have been filed against companies in the electric vehicle industry. The underlying circumstances may illustrate some of the pitfalls involved when a fledgling private firm becomes a publicly traded company. The plaintiff’s April 2, 2021 complaint can be found here.
Continue Reading Another Post-SPAC Merger Electric Vehicle Company Securities Suit

In a pattern that is becoming familiar, Lordstown Motors, an electric vehicle company that recently merged into a publicly traded SPAC and that was the subject of an even more recent short seller report, has been hit with a securities class action lawsuit. The defendants named include only executives of the vehicle company and do not include any former officers of the SPAC. A copy of the March 18, 2021 complaint can be found here.
Continue Reading Another Short Seller-Targeted Post-DeSPAC Electric Vehicle Company Hit with a Securities Suit

In the latest example of a company that recently merged into a publicly traded SPAC getting hit with a post de-SPAC transaction securities suit, electric vehicle technology company XL Fleet Corp. has sustained a securities class action lawsuit that names as defendants both directors and officers of the post-merger operating company and a former officer of the SPAC. As discussed below, the new lawsuit shares several features in common with many of the recent SPAC-related lawsuit filings. A copy of the March 8, 2021 lawsuit can be found here.
Continue Reading Electric Engine Technology Company Hit with Post De-SPAC Merger Securities Suit

Regular readers know that I have been documenting on this blog the recent rise in securities class action lawsuit filings relating to SPAC entities and transactions (most recently here). Along the way, I have suggested that given the sheer amount of SPAC IPO activity during 2020 and 2021, the volume of this type of litigation is likely to increase. The latest evidence supporting this possibility is the securities class action lawsuit filed on February 24, 2021 against MultiPlan Corporation, a health services company that in October 2020 merged into a SPAC. As discussed below, this latest lawsuit has several features that could be recur in future SPAC-related securities lawsuits. A copy of the February 24, 2021 complaint against MultiPlan and other defendants can be found here.
Continue Reading Insurance Services Firm, SPAC Sponsor, and SPAC Execs Hit with Post-deSPAC Securities Suit

In the latest SPAC-related securities class action lawsuit, a plaintiff shareholder has filed a securities class action lawsuit against a post-SPAC-acquisition biopharma company in which the plaintiff claims that the risk of the company’s post-merger clinical trial setback should have been unearthed in the pre-merger due diligence process. As discussed below, this lawsuit may prefigure some of the likely patterns for future SPAC-related securities litigation.
Continue Reading Post-SPAC Acquired Biopharma Firm Hit with Securities Suit

Barely six weeks into the new year, there have already been (according to the SPACInsider website) 127 Special Purpose Acquisition Company (SPAC) IPOs so far this year — that is, in less than a month and a half, there have already been more than 50% of the number of SPAC IPOs as there were in all 52 weeks of the record-setting 2020 SPAC offering year. The SPAC IPO extravaganza has many implications, but unquestionably among the many related consequences is that following-on to the wave of SPAC offerings is the possibility that we are about to see an increase in SPAC-related litigation.

Anyone interested in seeing what this coming litigation might look like will want to take review the securities class action complaint filed last week in the Middle District of Tennessee against Clover Health Investments, a health services firm became a publicly traded company in January 2021 through reverse merger with a SPAC from the SPAC IPO class of 2020. The February 5, 2021 complaint, a copy of which can be found here, alleges that the de-SPAC transaction-related documents and disclosures failed to disclose, among other things, that the acquisition target company was the subject of a DOJ investigation.
Continue Reading Securities Suit Alleges Failure to Disclose DOJ Investigation Before De-SPAC Transaction

In my recent survey of key 2020 D&O developments I highlighted the surge of SPAC IPOs last year and conjectured about the possible increase in the number of D&O claims that might arise following the transactions in which private companies merge into the public traded SPACs ( the so-called de-SPAC transaction). A securities suit filing this week demonstrates how these claims might well arise and does suggest we could indeed be in for an influx of securities suits and other D&O claims filed following de-SPAC transactions.
Continue Reading Post-SPAC Merger Company Hit with Post-Transaction Securities Suit