Private companies with cutting-edge technology have become particularly attractive targets for special purpose acquisition companies (SPACs). These private companies may choose to go public via SPAC for a number of reasons that include the ability to share projections with investors, better valuation prospects and deal execution certainty. Much like companies that go public by way of a traditional IPO, however, companies that go public via SPAC can also become subject to Section 10(b) securities class actions. The risk for this type of company may be particularly acute given its high growth prospects or the volatility that may accompany its securities. An example of a company that went public via SPAC that was quickly confronted with this type of action is Velodyne.
class certification
SPAC Securities Class Action Comes for Private Equity Sponsor
By Corey I. Rogoff on
Pharmaceutical and biotech companies, with proprietary and potentially lucrative products, have been popular targets for SPAC sponsors. Unfortunately, one such private equity sponsor may have its hands full after its managing partner was publicly named in a securities class action.
Supreme Court to Consider Securities Class Action Issue
By Peter Duffy Doyle & Julia Alonzo on
On December 11, 2020, the United States Supreme Court granted certiorari in a shareholder securities litigation against Goldman Sachs.[1] On appeal, Goldman argues that federal securities law permits issuer defendants in purported class actions to rebut the presumption of reliance where the alleged misstatements are of such a generic…