As I noted in my recent year-end wrap up, one of the top D&O stories of 2021 was the surge of SPAC-related securities litigation during the year. Most of these SPAC-related lawsuits have only just been filed, and it remains to be seen how they will fare. However, in a development that may represent an early sign concerning the prospects for these cases, on January 14, 2022, a federal district court substantially denied the motion to dismiss in the securities class action lawsuit filed last year against electric vehicle battery developer and manufacturer, QuantumScape. As discussed below, the court’s dismissal motion ruling has several noteworthy features. Northern District of California Judge William H. Orrick’s January 14, 2022 in the QuantumScape case can be found here.
Continue Reading SPAC-Related Securities Suit Dismissal Motion Substantially Denied

As I have noted on this site (most recently here), electric vehicle companies that have merged with publicly traded SPACs have become a favored target for plaintiffs’ securities lawyers. In the latest example of this phenomenon, on December 23, 2021, a plaintiff shareholder filed a securities class action lawsuit against the EV company Faraday Future Intelligent Electric, Inc., which merged with a SPAC on July 21, 2021. Like many of the EV companies that have been sued, Faraday Future’s stock price dropped after it was the subject of a short seller report. A copy of the complaint against Faraday Future can be found here.
Continue Reading And Again: Another Post-SPAC Merger EV Company Hit with Securities Suit

In the surge of SPAC-related litigation that has been filed this year, one of the distinctive features of the filings has been that many of the lawsuits have followed shortly after a short seller published a report critical of the defendant company. In the latest example of this phenomenon, a shareholder has filed a securities class action lawsuit against biotech firm Ginkgo Bioworks Holdings, which merged with a SPAC in September 2021, after the company’s share price declined following the publication of a negative short seller report. As discussed below, this new lawsuit has several other features in common with the SPAC-related securities lawsuits filed this year. A copy of the November 18, 2021 complaint against Ginkgo Bioworks can be found here.
Continue Reading Shareholders Sue Post-SPAC-Merger Biotech Firm After Short Seller Attack

Hyzon Motors, a hydrogen fuel cell vehicle development company that merged with a SPAC in July 2021 and that was the subject of a recent scathing short seller report, has been hit with a securities class action lawsuit. The defendants in the lawsuit include two former officers of the SPAC with which Hyzon merged. A copy of the September 30, 2021 complaint filed against Hyzon can be found here.
Continue Reading Fuel Cell Vehicle Company Hit With SPAC-Related Securities Suit Following Short Seller Report

In the latest example of a post-SPAC-merger company getting hit with a securities class action lawsuit, the online sports gaming and betting company DraftKings has been sued in a securities suit involving alleged pre- and post-SPAC-merger activity of one of the merged companies. As discussed below, the new lawsuit is the latest SPAC-related securities suit based supposed revelations in a short-seller’s report. A copy of the plaintiff’s complaint can be found here.
Continue Reading DraftKings Hit with SPAC-Related Securities Suit

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 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

Nessim Mezrahi

In the following guest post, Nessim Mezrahi takes a look at the Second Circuit’s November 25, 2020 Summary Order in Lea v. TAL Education Group, in which the appellate court reversed the trial court’s dismissal of a securities class action complaint. Many of the plaintiff’s allegations in the complaint were based on matters first raised in a short seller report, a consideration about which Mezrahi has concerns, as discussed below. Mezrahi is co-founder and CEO of SAR, a securities class action data analytics and software company. I would like to thank Nessim for allowing me to publish his 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 Nessim’s article.
Continue Reading Guest Post: Second Circuit Ruling Exposes D&Os to Exchange Act Claims Based on Biased Short-Seller Research

Nessim Mezrahi

In the following guest post, Nessim Mezrahi discusses the need for transparency in third-party litigation funding arrangements and judicial scrutiny on short-seller reports relied on by plaintiff securities class action attorneys. Nessim is cofounder and CEO of SAR, a securities class action data analytics and software company. A version of this article previously was published on Law360. I would like to thank Nessim for allowing me to publish his 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 Nessim’s article.
Continue Reading Guest Post: Funder, Short-Seller Use Undermines Securities Class Actions