In two dismissal motion grants last week in pending SPAC-related securities suits, the respective courts’ rulings could have potential significance for other pending or prospective SPAC-related cases. The January 10, 2023, ruling in the SPAC-related suit involving DraftKings has important implications for the many pending SPAC-related cases based on short seller reports, and the January 11, 2023, ruling in the Lucid case has potential implications for SPAC-related securities suits based on alleged pre-merger misrepresentations. The two rulings and their potential significance are discussed below.
In my recent wrap-up of the top D&O stories of 2022, I noted that one of last year’s key topics was the quantity of litigation involving special purpose acquisition companies (SPACs). It now appears that this trend is continuing into the new year. Late last week, a plaintiff shareholder filed a SPAC-related securities suit against battery development company Enovix, alleging that the company had misrepresented its manufacturing capabilities. A copy of the January 6, 2023, complaint against the company can be found here.…
In a few days, when I work up my summary of the year’s events in the world of D&O, one of the stories I will be covering will be the volume of SPAC-related securities litigation during the year. The SPAC-related litigation represents a significant part of the year’s securities class action lawsuit filings. The latest example of this phenomenon is the lawsuit filed late last week against residential home improvement financing platform Sunlight Financial Holdings, Inc., which became a public company through a July 2021 merger with a SPAC. The new lawsuit is in many ways representative of the kinds of SPAC-related lawsuits filed this year. A copy of the complaint in the new lawsuit can be found here.
Continue Reading Construction Financing Platform Hit with SPAC-Related Securities Suit
After a several months-long lull in which relatively few SPAC-related securities suits were filed, plaintiffs’ lawyers have now in the past several days filed several new cases. The latest example is the lawsuit filed late last week against the electric scooter company Bird Global, Inc., which merged with a publicly traded SPAC in November 2021. The lawsuit comes after the company’s announcement on November 14, 2022 that due to a reporting error the company would be restating its previously published financial statements for several prior reporting periods. A copy of the November 17, 2022 complaint can be found here.
Continue Reading Electric Scooter Company Hit With SPAC-Related Securities Suit
Although there have been literally dozens of SPAC-related securities class action lawsuits filed since January 1, 2021, in recent months the pace of filing of these lawsuits has noticeably slowed. After an extended period when many of these suits were filed each month, during the period since May 31, 2022 only three of these suits have been filed. However, this past week, a SPAC-related securities lawsuits was filed against Core Scientific, a digital mining company that merged with a SPAC in January 2022. As discussed below, this latest filed lawsuit has several interesting features. A copy of the complaint filed against Core Scientific can be found here.
Continue Reading Digital Asset Mining Company Hit with SPAC-Related Securities Suit
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
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
Every year after Labor Day, I take a step back to survey the most important current trends and developments in the world of Directors’ and Officers’ liability and insurance. This year’s review is set out below. As the following discussion shows, this is a particularly eventful time in the world of D&O.
Continue Reading What to Watch Now in the World of D&O
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