SPACs

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Yelena Dunaevsky
Teresa Milano

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

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

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

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

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

In my recent mid-year review of the year-to-date securities lawsuit filings, I noted that certain factors that had contributed significantly to the number of securities suits filed in 2022 were less of a factor in the first six months of 2023. Among these diminished factors was the number of SPAC-related lawsuit filings. But while the number of SPAC-related suit filings has been down so far this year, SPAC-related suits are nonetheless still being filed. The latest example of a SPAC-related filing this year is the suit filed on July 6, 2023, against the Israeli company, Hub Cyber Security, Ltd., which became a Nasdaq-listed company following the February 2022 merger of its predecessor operating company with a SPAC.  The new lawsuit illustrates the ways in which litigation can arise against companies that are the product of completed SPAC mergers.Continue Reading Israeli Firm Hit with SPAC-Related Securities Suit

The number of securities class action lawsuit filings in the year’s first half was up slightly compared to the number of filings in the first half of 2022, though roughly in line with the long-term average number of half-year securities suit filings. As discussed below, several factors contributed to the number of filings in the first six months of 2023, including the number of crypto and digital currency-related filings and the number of filings related to macroeconomic factors (such as interest rates, labor supply, and inflation). Concerns that drove securities suit filings in recent periods, including COVID-related suits and SPAC-related suits, were less of a factor in the year’s first half.Continue Reading Securities Suit Filings Up Slightly in Year’s First Half

As I have chronicled on this blog (most recently, here), a wave of litigation has followed in the wake of the SPAC boom in late 2020 and early 2021. Since January 1, 2021, over 60 SPAC-related securities class actions have been filed, and there has also been a number of Delaware state court breach of fiduciary duty lawsuits, as well. Although many of these suits have only just been filed and therefore have not yet been subjected to judicial scrutiny, there have been several dismissal motion rulings in a number of these cases. A May 2023 memo from the Jones Day law firm entitled “SPAC Litigation: A Review of Recent Developments” (here) reviews the state of play in the various judicial rulings so far in the SPAC-related cases.  As the memo notes, “many high-profile suits have recently survived motions to dismiss (at least in part), and at least one has been resolved through a significant settlement.”Continue Reading Key SPAC-Related Litigation Developments

One of the significant contributing factors to the total number of securities class action lawsuit filings in 2022 was the number of SPAC-related securities suits filed during the year. However, while there were a significant number of SPAC-related suits filed in 2022, the number of SPAC-related suit filings declined as the year progressed, to the point that it was not clear whether the phenomenon would continue into 2023. As it has turned out, the plaintiffs’ lawyers have continued to file SPAC-related suits this year. In the latest example, on May 12, 2023, a plaintiff shareholder filed a securities suit against energy storage services provider Stem, Inc., which merged with a SPAC in April 2021. This latest filing shows that the SPAC-related suits continue to be filed and that the suits continue to be a factor in the total overall number of securities suit filings.Continue Reading Energy Services Company Hit with SPAC-Related Securities Suit

As readers of this blog know, in the last couple of years a significant number of SPAC-related securities lawsuits have been filed, often arising after the post-merger de-SPAC company stumbles following the SPAC merger. In many of these cases, the securities suit plaintiffs often allege that the pre-merger private company made misleading statements about its business or operations, the truth about which only became apparent after the merger with the SPAC was completed.

In an interesting decision in a securities suit involving the used car consignment company CarLotz, which merged with a SPAC in January 2021, the court held that the named plaintiffs, one who purchased shares of the pre-merger SPAC and another bought shares in the post-merger de-SPAC, did not have standing under the securities laws to sue for alleged misrepresentations made by the pre-merger private company. Because this issue often comes up in SPAC-related securities suits, the court’s ruling potentially could have important implications in other SPAC lawsuits. A copy of the Southern District of New York’s March 31, 2023, order can be found here.Continue Reading Plaintiffs Lack Standing to Sue Over Pre-Merger Statements of SPAC Target Company