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 here.
Continue Reading SPAC-Related Securities Suit Filed Against Plastics Recycling Company

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 here.
Continue Reading Online Gaming Platform Hit with Post-SPAC Merger Securities Suit

In reporting in prior posts on SPAC-related litigation, I have primarily focused on federal court securities class action litigation (for example, here). In addition to the federal court litigation, there has also recently been state-court SPAC-related litigation filed, as I have also briefly noted (here, for example). In early April 2021, the Akin Gump law firm published a client alert memo noting that, at the time, over thirty SPACs has been sued in merger objection lawsuits filed in New York state court. In a May 5, 2021 post on her On the Case blog (here), Alison Frankel updated the Akin Gump filing data and reported that there have now been over 60 New York state court SPAC-related lawsuits filed. As Frankel’s article notes, the litigation itself is only part of the picture, as the plaintiffs’ lawyers involved have also been active in presenting SPACs with pre-lawsuit demand letters as well.
Continue Reading SPAC-Related State Court Merger Objection Litigation

Is the SEC staff about to issue guidelines specifying that the safe harbor for forward looking statements does not apply to SPAC merger transactions? An April 28, 2020 exclusive report on Reuters (here) says that the SEC is considering taking the step. If the agency were to issue guidance restricting the availability of the safe harbor for SPACs, it could significantly restrict SPAC’s use of target company projections in advance of de-SPAC mergers, and even further slow the already cooling SPAC market. The SEC’s possible action is discussed further in an April 29, 2021 post on the Cooley law firms PubCo blog, here.
Continue Reading Are SEC Guidelines on SPAC Projections Ahead?

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.
Continue Reading Akazoo SPAC-Related Litigation Partially Settled for $35 Million

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.
Continue Reading SPAC and Target Company Hit with Pre-Merger 10b-5 Class Action Suit

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 George C. Hanks, Jr. denied the defendants’ motion to dismiss in the Alta Mesa case, in a ruling that may be of interest in relation to the numerous more-recently filed SPAC-related lawsuits. A copy of the order denying the defendants’ motion to dismiss can be found here.
Continue Reading SPAC-Related Securities Suit Survives Dismissal Motion

Electric vehicle battery company Romeo Power, which became a publicly traded company through a December 2020 merger with a SPAC, has been hit with a securities class action lawsuit following a share price decline after its announcement of a disruption in its supply chain. The new lawsuit is interesting both because of the SPAC angle and because it resulted from supply chain issues. The new lawsuit against Romeo Power was, in fact, one of two securities suits filed last week arising out of supply chain disruption. As discussed below, supply chain disruption could represent an emerging new area of corporate and securities litigation exposure. I also discuss below the fact that the new lawsuit involves yet another de-SPAC company in the electric vehicle industry
Continue Reading Tracking Two Emerging Securities Litigation Trends: SPACs and Supply Chain Disruption

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