Post-SPAC Technology Company Hit with Securities Class Action

Post-SPAC Technology Company Hit with Securities Class Action

Non-public companies with state-of-the-art expertise have become particularly attractive targets for Special Target Acquisition Companies (SPACs). These non-public corporations may choose to go public through SPAC for a variety of reasons that include the flexibility to share estimates with buyers, high valuation probabilities and performance certainty.

Similar to corporations going public through a traditional IPO, however, corporations going public through a SPAC can also change subject to Part 10(b) securities class actions.

The opportunity may also be particularly acute for this type of firm, given its potential for high growth or the volatility that occurs with its securities. An example of an organization that went public through SPAC, which soon encountered such momentum, is Velodyne.

In 1983, David Corridor based Velodyne as an organization recognized for manufacturing specialized audio equipment. Nonetheless, in 2006, he patented an invention often called the multi-beam spinning LiDAR sensor that could turn into the backbone of his firm.

LiDAR sensors use light to detect the distance to an object, in the same way sonar sensors use sound waves. LiDAR is considered the key to the future of self-driving vehicles and the way these autos can navigate obstacles and environments in real time.

A SPAC named Graf Industrial Corp. efficiently completed its merger with Velodyne Lidar on September 29, 2020. Between November 2020 and February 2021, Velodyne made certain public statements and SEC filings related to its monetary health and its operations. board of.

Nonetheless, on February 22, 2021, Velodyne announced that David Corridor had been removed from his position as chairman and that his wife, Marta Corridor, had been removed from her position as chief advertising officer following an audit committee investigation. was given.

The company disclosed that the investigation concluded “Mr. Corridor and Ms. Corridor behaved inappropriately with respect to the Board and firm procedures, and did not act with respect, honesty, integrity and candor in their dealings with firm executives and administrators.” .

Shortly thereafter, on March 2, 2020, a sole plaintiff filed an alleged class action against Velodyne Lidar in the U.S. District Court docket for the Northern District of California, in addition to the two officers who served during the class period.

In their criticism, the plaintiffs alleged that the defendants made materially false or misleading statements regarding the existence of internal investigations by the administrators of Velodyne and during the class gap (November 2020 to February 2021).

Among these alleged false statements is the company’s February 18, 2021 announcement {that a director associated with SPAC Cars has resigned and that his “option to resign was not the result of any disagreement with the firm.” Notably, the criticism contains no allegations regarding Velodyne’s merger with Graf Industrial.

Velodyne has yet to file its response to the criticism, and the court has not made a statement regarding class certification. We will continue to follow up on this matter and activities dealing with D-SPAC public corporations.

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