Long-time readers know that the significant amount of SPAC activity in past years led to a surge in SPAC-related litigation. Some of this litigation has taken the form of traditional securities class action lawsuits. However, among the more noteworthy developments in the rise of SPAC-related litigation has been the emergence of a separate type of suit, the Delaware direct action breach of fiduciary class action lawsuit, sometimes referred to a MultiPlan claim in reference to the first suit of the type to be filed. As detailed below, these kinds of lawsuits have gone through a relatively swift evolution. Many of the these kinds of cases remain pending, have not yet reached the settlement stage. However, the GeneDX lawsuit, which is one of these kinds of cases, recently settled for $21 million, subject to court approval. There are a number of interesting aspects of this settlement, as discussed below. The parties settlement stipulation in the case can be found here.Continue Reading Delaware SPAC-Related Direct Action Breach of Fiduciary Duty Suit Settles for $21 Million
de-SPACs
Cannabis Company Hit With SPAC-Related Securities Suits
For the last several years, securities class action lawsuits related to SPACs and de-SPACs have been a significant factor in the overall annual number of securities suit filings. SPAC-related suits remain a significant factor in the number of filings again this year, even though it has now been several years since the peak of the SPAC frenzy. In the latest example, on October 17, 2024, a plaintiff shareholder filed a securities suit against cannabis company WM Technology alleging that both prior to and following its predecessor company’s merger with a SPAC, the company misrepresented a key customer engagement metric. The new lawsuit has some interesting features, as discussed below. A copy of the complaint can be found here.Continue Reading Cannabis Company Hit With SPAC-Related Securities Suits
Medical Device Company Hit with SPAC-Related Securities Lawsuit
In my recent review of the 1H24 securities class action litigation filings (here), I noted that SPAC-related securities suits were less of a factor in the overall number of suit filings during the year’s first six months than they had been in recent years. However, even though the peak of the SPAC frenzy was several years ago now, SPAC-related securities suits are continuing to be filed. The latest example is the SPAC-related securities suit filed late last week against SeaStar Medical Holding Corporation, which is the product of a 2022 SPAC merger. The new lawsuit has several interesting features, as discussed below. A copy of the July 5, 2024, complaint in the lawsuit can be found here.Continue Reading Medical Device Company Hit with SPAC-Related Securities Lawsuit
EV Company Hit With SPAC-Related Securities Suit
SPACs were back in the business headlines again last Friday, as the news circulated that shareholders of Digital World Acquisition Corp., a special purpose acquisition company, had approved the proposed business combination with Trump Media & Technology Group, the corporate parent of Truth Social, Donald Trump’s social media company. On the same day, in a reminder of what has happened to all too many companies that merged with SPACs during the peak of the SPAC frenzy in 2020 and 2021, shareholders of a SPAC that merged with an electric vehicle company sued the directors and officers of the SPAC as well as the EV company, alleging that in the merger proxy statement the defendants failed to disclose multiple business problems at the target company. The lawsuit is the latest SPAC-related securities suit to be filed after the collapse of the SPAC surge.Continue Reading EV Company Hit With SPAC-Related Securities Suit
Two-Fer: SPAC-Merged Company Hit With COVID-Related Securities Suit
As readers know, in recent years I have been tracking two securities class action litigation filing trends: the filing of SPAC-related lawsuits, and the filing of COVID-related lawsuits. In a noteworthy development, a securities suit filed last week embodies both of these filing trends. That is, a company that was formed through a SPAC merger has been hit with a securities suit based on COVID-related allegations. As discussed below, the new lawsuit has several interesting features. A copy of the February 28, 2024, complaint can be found here.Continue Reading Two-Fer: SPAC-Merged Company Hit With COVID-Related Securities Suit
Guest Post: SPACs Poised to Turn a Corner in 2024: Annual Risk Update
As readers of this blog well know, SPAC transactions have been a frequent target of corporate and securities lawsuits. In the following guest post, Yelena Dunaevsky, Esq., Senior Vice President at Woodruff Sawyer, Executive Editor, SPAC Notebook and Teresa Milano, Esq., Vice President at Woodruff Sawyer, take a detailed look at the SPAC litigation and enforcement activity so far, including some interesting observations about recent trends. A version of this article was previously published on the SPAC Notebook (here). I would like to thank Yelena and Teresa for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.Continue Reading Guest Post: SPACs Poised to Turn a Corner in 2024: Annual Risk Update
EV Company Hit with SPAC-Related Securities Suit
One of the most important securities class action litigation trends in recent years has been the wave of securities lawsuits involving SPACs. And while as time has passed since the peak of the SPAC IPO frenzy in late 2020 and early 2021, SPAC-related securities class action suits continue to be filed. The latest example is the securities suit filed earlier this week against the electric vehicle company Fisker, which merged with a SPAC in 2020. A copy of the November 27, 2023, complaint can be found here.Continue Reading EV Company Hit with SPAC-Related Securities Suit
SPAC-Related Suit Shows How Geopolitical Risk Can Translate into Securities Litigation
One factor that contributed significantly to the total number of securities class action lawsuits filed in 2021 and 2022 was the proliferation of SPAC-related securities suit filings. Although diminished in number this year relative to the two prior years, and while the filing pace has declined as the year has progressed, SPAC-related securities suits continue to be filed in 2023. In the latest example of this continuing trend, last week a plaintiff shareholder filed a securities suit against the executives and sponsor of a SPAC that merged with a health monitoring technology company that later went bankrupt. The named defendants include officers of the bankrupt company. While the suit is interesting as an example of the continuing threat of SPAC-related litigation, it may be even more important as an illustration of the way that geopolitical risk increasingly can translate into securities litigation.Continue Reading SPAC-Related Suit Shows How Geopolitical Risk Can Translate into Securities Litigation
Electric Vertical Aviation Company Hit with SPAC-Related Securities Suit
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. Continue Reading Electric Vertical Aviation Company Hit with SPAC-Related Securities Suit
SPAC-Related Securities Suit Filed Against Medical Payments Recovery Firm
As I have noted on this site, for the last several years (going back at least to 2021, and arguably even further than that), one of the significant factors contributing to securities class action lawsuit filings has been the number of SPAC-related securities suits. In the latest sign that the trend of SPAC-related securities suit filings is continuing, on August 23, 2023, a plaintiff shareholder filed a securities suit in the Southern District of Florida against medical payments collection firm MSP Recovery and certain of its executives, as well as against the directors and officers of the SPAC into which the company merged in 2022. A copy of the plaintiff’s complaint can be found here. PLEASE ALSO SEE THE UPDATE, below. Continue Reading SPAC-Related Securities Suit Filed Against Medical Payments Recovery Firm