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
The directors of companies have roles, responsibilities and potential liabilities. But who can be held liable as a director? That was the question that the Third Circuit recently answered in an interesting ruling in which the appellate court determined that board observers could not be held liable as directors or director equivalents under Section 11 for alleged registration misstatement misrepresentations. The decision raises some interesting considerations when it comes to directors and their roles. The Third Circuit’s July 23, 2019 decision can be found