Ask HN: Sue after poorly managed SPAC?

#1

Post by spac_throwawayy » Sun, Jul 03, 2022, 3:07 PM UTC

I’m a former employee of a company which recently went public through a SPAC. I had no lockup but communication from the company and setup were extremely poor so I was not able to sell my stock immediately. Accounts weren’t set up in advance. Tax info wasn’t in accounts. It was impossible to sell in the first week for everyone. Most people didn’t get access to shares for weeks. The price went down significantly in that time. Should I sue for some sort of damages? Maybe negligence or fiduciary duty? (Could have even been intentionally but I have no proof.)

Should we sue as a class or individuals? One law firm is interested in the case if class damages are over $10M (they are). My damages are ~$1M which seems to be on the bubble for suing as an individual. Either way, I’m not sure the potential downsides. From past examples I assume the company will make the case very hard for us and try to bleed us dry. Seems like it could also have negative career implications.

Re: Ask HN: Sue after poorly managed SPAC?

#2

Post by alex14fr » Sun, Jul 03, 2022, 3:27 PM UTC

No post body was provided.

Re: Ask HN: Sue after poorly managed SPAC?

#3

Post by Invictus0 » Sun, Jul 03, 2022, 3:32 PM UTC

Talk to a lawyer

Re: Ask HN: Sue after poorly managed SPAC?

#4

Post by toomuchtodo » Sun, Jul 03, 2022, 3:36 PM UTC

Recommend speaking with the firm willing to take the class action work, as well as having a review with an attorney specializing in securities law (consult cost should be less than $500). They'll (class action firm) work on contingency (typically, so you're not out of pocket, but they will take ~25-35% of whatever is recovered), and are a better gauge at your ability to recover damages than you are. Also, recovering anything is better than recovering nothing. RE career implications, someone will always judge you for something. Don't work for someone who judges you for attempting to protect yourself.

(not an attorney, not your attorney, not legal advice, educational purposes only)

Re: Ask HN: Sue after poorly managed SPAC?

#5

Post by spac_throwawayy » Sun, Jul 03, 2022, 3:41 PM UTC

toomuchtodo wrote: post #4

Recommend speaking with the firm willing to take the class action work, as well as having a review with an attorney specializing in securities law (consult cost should be less than $500). They'll (class action firm) work on contingency (typically, so you're not out of pocket, but they will take ~25-35% of whatever is recovered), and are a better gauge at your ability to recover damages than you are. Also, recovering…

Thanks. They have offered to work on contingency. Now it just requires someone to step up to be lead plaintiff in the case. Most people want to stay anonymous and only want to participate if someone else does all the work.

Re: Ask HN: Sue after poorly managed SPAC?

#6

Post by nowherebeen » Sun, Jul 03, 2022, 3:43 PM UTC

You selling immediately when they launch would have been the opposite of what they wanted to achieve. Which is lots of buyers pushing the price up.

I haven’t seen a single SPAC do well after a week though. They all drop like flies. There’s a reason why they don’t go through IPO.

Re: Ask HN: Sue after poorly managed SPAC?

#7

Post by spac_throwawayy » Sun, Jul 03, 2022, 3:44 PM UTC

Invictus0 wrote: post #3

Talk to a lawyer

We have. There is a firm with relevant experience that will take the case. Their advice is, not surprisingly, to pursue the case. They want to throw all sorts of things at the wall and see what sticks.

Re: Ask HN: Sue after poorly managed SPAC?

#8

Post by spac_throwawayy » Sun, Jul 03, 2022, 3:48 PM UTC

nowherebeen wrote: post #6

You selling immediately when they launch would have been the opposite of what they wanted to achieve. Which is lots of buyers pushing the price up. I haven’t seen a single SPAC do well after a week though. They all drop like flies. There’s a reason why they don’t go through IPO.

Right, which means they are incentivized to not give me access to my shares which I’m entitled to. Maybe not in their best interest for me to sell, so maybe fiduciary duty is the wrong thing. Seems like they can’t block me from selling. There must be something illegal with that.

Re: Ask HN: Sue after poorly managed SPAC?

#9

Post by ianbutler » Sun, Jul 03, 2022, 3:48 PM UTC

I’m sorry you were hurt by this. SPACs in general are toxic, the vast majority are down from their listing price after 6months. A business going through a spac generally isn’t strong enough to go through the normal IPO process and the SEC has agreed that they’re generally poor for everyone but the bank and investors pushing it and have already started regulating them.

Re: Ask HN: Sue after poorly managed SPAC?

#10

Post by nowherebeen » Sun, Jul 03, 2022, 3:52 PM UTC

spac_throwawayy wrote: post #8

nowherebeen wrote: post #6

You selling immediately when they launch would have been the opposite of what they wanted to achieve. Which is lots of buyers pushing the price up. I haven’t seen a single SPAC do well after a week though. They all drop like flies. There’s a reason why they don’t go through IPO.

Right, which means they are incentivized to not give me access to my shares which I’m entitled to. Maybe not in their best interest for me to sell, so maybe fiduciary duty is the wrong thing. Seems like they can’t block me from selling. There must be something illegal with that.

Not necessary. You need to talk to a lawyer. No one here can give you legal advice.