SPCE.US
id: 804
Virgin Galactic ($SPCE) Investor Settlement
The parties have reached an agreement to settle the case, but the terms are still being finalized.
E.D. New York
Court1:21-cv-03070
Case number07/10/2019
Class period Start08/04/2022
Class period EndVirgin Galactic has reached a settlement with $SPCE investors over claims it misled the public about its spaceflight tech and safety before key launches like Unity 22.
Case Details:
- Virgin Galactic pushed back commercial flights and admitted that the ships, as built, are different enough from the drawings.
- $SPCE declined from its peak by over 85%, wiping out $13 billion in shareholder equity.
- Investors suspect Virgin and certain Accountables of concealing that the Company did not have accurate engineering drawings.
On August 4, 2022, Virgin Galactic pushed back commercial flights to the H1 2023.
Colglazier admitted when asked about the cause of the delay that supply chain issues, which he had blamed on the Q1 2022 call, were “not really the driver.” Instead, Colglazier blamed the fact that “the ships, as built, are different enough from the drawings that we had, that we need to go back and conform those drawings to the as-builts.”
- In an August 5, 2022 report, a Canaccord Genuity analyst explained that in additional conversations, Virgin Galactic “indicated that the engineering team noticed slightly different angle measurements on the actual pylon to which the spaceship is attached than what was reflected on the original engineering drawings, which required some changes to upgraded components considering that the wing on Eve is very thin.”
- The analyst also reduced his price target from $8 to $7.
- On this news, $SPCE fell by 17.5%, damaging investors.
Going back to October 2019, the Company and its Leaders marketed the reverse merger with Social Capital Hedosophia Holdings Corp. (SPAC) that would take Virgin Galactic public as the chance to buy shares in the world’s first commercial spaceline. They claimed they had built and successfully tested a system that was ready to take passengers to space, pointing to Virgin Galactic’s supposedly successful spaceflight in February 2019, and creating the impression that Virgin Galactic was on the cusp of commercial spaceflight.
Taking all representations and facts into account, shareholders have reasons to suspect Virgin Galactic and its certain executives of concealing from investors that the Company did not have accurate engineering drawings of Unity or Eve. Furthermore, the investor complaint alleges that they made materially false and misleading statements regarding the Company's business, operations, and compliance policies, specifically, made false and/or misleading statements and/or failed to disclose that:
- for accounting purposes, SCH's warrants were required to be treated as liabilities rather than equities;
- Virgin Galactic had deficient disclosure controls and procedures and internal control over financial reporting;
- as a result, the Company improperly accounted for SCH warrants that were outstanding at the time of the Business Combination;
- as a result, the Company's public statements were materially false and misleading at all relevant times.
Case Type
US Securities Class Action
Case Status
Tentative Settlement
Alleged Offence
Misleading Statements,
Financial Misrepresentation,
Failure to Disclose,
Omissions
Suspected Party
Directors,
Management,
Investment Bank,
Service Provider
Security Type
Stocks
Trade Direction
Long
Filing date
05/28/2021
Plaintiffs
Mark Kusnier, Robert Scheele, Xinqiang Cui, Justin Carlough, Jennifer Ortiz, Richard O-KeefeJones, Vipul Gupta, Maria Josephine Rosales, Hesham Ibrahim
Attorneys
Glancy Prongay & Murray LLP (Los Angeles, CA), The Rosen Law Firm, P.A. (New York, NY)
Defendants
Richard Branson, Chamath Palihapitiya, George Whitesides, Michael Colglazier
Judge
Hon. Allyne R. Ross
Trades matching type
FIFO
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