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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

In the latest securities class action lawsuit to be filed against a post-SPAC-merger electric vehicle company, a plaintiff shareholder has filed a securities suit against the EV company Arrival SA, following the company’s announcement in November 2021 of a slowdown in its production schedule and of the company’s need to raise additional capital. As discussed below, the new lawsuit against Arrival has several characteristics in common with other SPAC-related securities suits that have been filed this year. A copy of the complaint that was filed against Arrival on December 22, 2021 can be found here.
Continue Reading Yet Another Post-SPAC-Merger Electric Vehicle Company Hit with Securities Suit

As I have noted on this site, the SEC has in recent months filed SPAC-related enforcement actions, including the action filed in July 2021 against Stable Road Acquisition Corporation (discussed here), and the Y, 2021 action filed against Nikola Motors founder Chad Milton (discussed here). These matters were not, however, the first SPAC-related SEC enforcement actions; there have been others previously, including the September 2020 SPAC-related enforcement action against music streaming company Akazoo, S.A. In something of a milestone regarding SPAC-related actions, on October 27, 2021, the SEC announced that it had reached a settlement of the Akazoo enforcement action. The SEC’s October 27, 2021 press release about the settlement can be found here. The October 27, 2021 Agreed Final Judgment in the Enforcement Action can be found here.
Continue Reading SEC Enters Settlement in SPAC-Related Enforcement Action Against Akazoo

In my previous blog post, I noted that plaintiffs’ attorneys’ have been and are continuing to file SPAC-related securities class action suits,  and I also noted that the latest filings are targeting SPAC and SPAC merger entities that completed their IPOs in the early stages of the SPAC IPO frenzy in late 2020 and early 2021. As if to underscore this point, yesterday a plaintiff shareholder filed a securities class action lawsuit against a post-SPAC-merger smart home products technology company, based on alleged misrepresentations in the company’s warranty accruals. The new lawsuit represents the latest example of the SPAC-related securities litigation trend. A copy of the complaint in the new lawsuit can be found here.
Continue Reading SPAC-Related Securities Suit Hits Smart Building Products Tech Company

Regular readers know that I have been tracking SPAC-related securities class action lawsuits and other SPAC-related litigation. As I discuss in the second item below, the SPAC-related class actions have continued to be filed as the year has progressed. There have also been SPAC-related shareholder derivative lawsuits filed as well, but none quite like the derivative lawsuit filed this week on behalf of Wall Street investor William Ackerman’s SPAC vehicle, Pershing Square Tontine Holdings Ltd. against the SPAC’s directors and other defendants. The suit claims that the defendants structured massive compensation arrangements for the SPAC sponsor and the SPAC directors in violation of the Investment Company Act of 1940 and the Investment Advisers Act of 1940. A copy of the complaint can be found here.
Continue Reading Bill Ackman’s SPAC’s Directors Hit With Derivative Suit Over “Staggering” Compensation

Largely due to a “substantial reduction” in the number of merger objection lawsuit filings, as well as a decline in the number of Section 11 and 1933 Act securities class action filings, the number of federal and state court securities class action lawsuits filed in the first six months of 2021 “dropped considerably” compared to the second half of 2020, according to a new report from Cornerstone Research. Filings of core Section 10(b) suit filings were, however, only “down modestly.” The report, entitled “Securities Class Action Filings: 2021 Midyear Assessment,” can be found here. Cornerstone Research’s July 28, 2021 press release about the report can be found here. My own analysis of the 1H21 federal court securities class action lawsuit filings can be found here.
Continue Reading Cornerstone Research: Securities Suit Filings Declined in Year’s First Half

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 SPAC-related securities class action lawsuit, a plaintiff shareholder has filed a securities class action lawsuit against a post-SPAC-acquisition biopharma company in which the plaintiff claims that the risk of the company’s post-merger clinical trial setback should have been unearthed in the pre-merger due diligence process. As discussed below, this lawsuit may prefigure some of the likely patterns for future SPAC-related securities litigation.
Continue Reading Post-SPAC Acquired Biopharma Firm Hit with Securities Suit

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

In my recent survey of key 2020 D&O developments I highlighted the surge of SPAC IPOs last year and conjectured about the possible increase in the number of D&O claims that might arise following the transactions in which private companies merge into the public traded SPACs ( the so-called de-SPAC transaction). A securities suit filing this week demonstrates how these claims might well arise and does suggest we could indeed be in for an influx of securities suits and other D&O claims filed following de-SPAC transactions.
Continue Reading Post-SPAC Merger Company Hit with Post-Transaction Securities Suit