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Ask HN: Sue after poorly managed SPAC?

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Re: Ask HN: Sue after poorly managed SPAC?

#11

Post by phphphphp »

SPACs are, in practice, a Hail Mary for companies with little hope of ever going public the traditional way because they’re just not that attractive to real investors. Therefore, if a company goes public via a SPAC, you should assume they’re in a very weak position. So, while you could conceivably sue (and perhaps get a settlement out of them) it’s going to be a pretty poor outcome for you even in the best case scenario.

If you look at buzzfeed for example (if I had to guess, that’s the company you’re with) they’re basically circling the drain and the SPAC was a last ditch effort: if the burned employees of buzzfeed sue them, where’s the money going to come from? Buzzfeed can barely keep the lights on.

If they’re offering to work on contingency, go for it, nothing to lose, but don’t pin your hopes on seeing anything close to your unrealised gains.

If you’re not with buzzfeed, read pieces like this: https://www.nytimes.com/2022/04/25/business/media/buzzfeed-e...

Re: Ask HN: Sue after poorly managed SPAC?

#12

Post by refurb »

I like the quote from the movie Heat: “He knew the risks, he didn’t have to be there. It rains you get wet.”

SPACs are a high risk way of going public and nothing is guaranteed.

You could certainly sue, it might takes years and money from your pocket to get a judgement you’ll never collect a dime on, but yeah, you can sue.

Re: Ask HN: Sue after poorly managed SPAC?

#13

Post by djbusby »

spac_throwawayy wrote: post #5
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.

It's good you know who the lead plaintiff is now.

Re: Ask HN: Sue after poorly managed SPAC?

#14

Post by Dr_ReD »

spac_throwawayy wrote: post #5
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.

Yes, though lead plaintiffs can be compensated for the inconvenience...

Re: Ask HN: Sue after poorly managed SPAC?

#15

Post by ALittleLight »

spac_throwawayy wrote: post #7
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.

Perhaps you should speak to a disinterested lawyer not connected to the case with relevant expertise. If you can't find one through Google I believe you can contact the state bar and asked to be referred.

When talking to the other lawyer make it clear you want to hire him for a consult or for advice, that you want to lay out what's happening now, have him do some research, and get back to you with an opinion. Ask how much it will cost and, if reasonable, do that.

Re: Ask HN: Sue after poorly managed SPAC?

#16

Post by xwdv »

The downside is you will waste a lot of time and money and will ultimately accomplish nothing. Not what you want to hear but it’s the truth.

SPACs are mostly scams and most have done very poorly. You got caught up in one, reap what you sow.

Re: Ask HN: Sue after poorly managed SPAC?

#17

Post by spac_throwawayy »

phphphphp wrote: post #11

SPACs are, in practice, a Hail Mary for companies with little hope of ever going public the traditional way because they’re just not that attractive to real investors. Therefore, if a company goes public via a SPAC, you should assume they’re in a very weak position. So, while you could conceivably sue (and perhaps get a settlement out of them) it’s going to be a pretty poor outcome for you even in the best case scena…

Thanks for the link, I hadn’t seen that (not from buzzfeed). I agree the company won’t be in a strong financial position to pay out a huge penalty, but they have plenty to pay me a settlement for a fraction of my damages (real money to me and insignificant on the scale of a public company).

Interestingly, the law firm we’ve spoken too seems to want to avoid arbitration (the opposite of the buzzfeed case). Maybe that depends on the arbitration terms and end goal. (For us I assume it would be a pre-trial settlement.)

Re: Ask HN: Sue after poorly managed SPAC?

#18

Post by spac_throwawayy »

xwdv wrote: post #16

The downside is you will waste a lot of time and money and will ultimately accomplish nothing. Not what you want to hear but it’s the truth. SPACs are mostly scams and most have done very poorly. You got caught up in one, reap what you sow.

Thanks for the dose of negativity but I left long before SPAC was the path and I’ve already sold for more than I ever expected the stock to be worth. The question is, should they get away with mishandling my stock to their benefit.

Re: Ask HN: Sue after poorly managed SPAC?

#19

Post by chadash »

I have no idea about your odds of winning or whether it is worth the hassle… BUT, I doubt that suing will make much difference in your career. A lot of hiring managers won’t google you. Those that do may not care. I’m not saying NO ONE will care but my hunch is that most won’t.

Re: Ask HN: Sue after poorly managed SPAC?

#20

Post by abeppu »

xwdv wrote: post #16

The downside is you will waste a lot of time and money and will ultimately accomplish nothing. Not what you want to hear but it’s the truth. SPACs are mostly scams and most have done very poorly. You got caught up in one, reap what you sow.

> reap what you sow.

That seems unfair though, and highlights really the key issue. That idiom is about accepting the eventual outcomes of your own actions. But most people who hold equity are impacted by the the choices of a small minority of powerful players. The board and some C-level execs are the only people in a position to choose whether to pursue this path or influence how it is managed or administered. If those parties unloaded their shares in those early days while intentionally preventing the pool of current/former employees from selling theirs, that seems shady.

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