Special Purpose Acquisition Companies (SPAC) Lawsuits – Compensation & Help

Investors Harmed By Investments in SPACs May Have Right to Recover Losses

Recently, professional athletes and various high-profile celebrities have joined in on the boom of SPACs (Special Purpose Acquisition Companies), causing the U.S. Securities Exchange Commission to caution investors about investments in SPACs. Athletes like Stephen Curry, Serena Williams, Alex Rodriguez, and Colin Kaepernick are among those notable names who have invested in SPACs.

A notice from the SEC advised, “Celebrity involvement in a SPAC does not mean that the investment in a particular SPAC or SPACs generally is appropriate for all investors. Celebrities, like anyone else, can be lured into participating in a risky investment or may be better able to sustain the risk of loss. It is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment.”

 
Issuer Name Year To Date Return (%)

TPG Pace Beneficial Finance Co

(50.04)

Tuscan Holdings Corp

(44.62)

Lightning eMotors Inc

(41.02)

Stable Road Acquisition Corp

(39.53)

Bridgetown Holdings Ltd

(33.57)

NRX Pharmaceuticals Inc

(33.39)

 

SPACs are essentially a “Blank Check Company” meaning that until they acquire a private company, investors do not know who, or what, they will be investing in. Investors can range from these well-known celebrities or well-known private equity funds to the public. These companies form only to raise capital through an initial public offering (IPO) and do not sell or make any product, with the sole purpose eventually to acquire another company.

It is possible for SPACs to exhibit a great deal of volatility. As of June 2021, SPACs such as the ones listed in the chart above have lost from 30-50% of their return year to date. If you were recommended to invest in a SPAC by your broker or financial advisor, you might have a right to make a legal claim. Brokers are required to conduct appropriate due diligence, accurately describe the risks and rewards of the investments they offer, and only recommend suitable investments to their clients. If you believe that your SPAC investment is losing money, please give Levin Papantonio Rafferty a call for a free evaluation.

 
 
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