Class action securities fraud lawsuit filed against Virgin Galactic
Capitalism in space: In what will likely be the first in a number of similar legal actions, a lawsuit was filed against Virgin Galactic earlier this month accusing the company and a number of upper management individuals of securities fraud.
A class action lawsuit was filed in New York on Dec. 7 alleging securities fraud by Virgin Galactic, which went public on the New York Stock Exchange (NYSE) in October 2019 after merging with Chamath Palihapitiya’s Social Capital Hedosophia (SCH).
Named in the lawsuit are Virgin Galactic Holdings, CEO Michael Colglazier, former CEO George Whitesides, former current chief financial officer Doug Ahrens, and former chief financial officer Jon Compagna.
The lawsuit was filed amid years-long delays in the start of commercial human suborbital flights that have caused a sharp decline in the value of the stock. Virgin Galactic began trading on the New York Stock Exchange at an opening price of $12.34 on Oct. 28, 2019. The stock is now trading at $14.46 having previously soared to a high of $62.80.
The article description of the condition of the company’s WhiteKnightTwo carrier plane and its suborbital craft VSS Unity suggests that the likelihood of further tourist flight could be low.
It is also interesting that Richard Branson is not named, as he clearly played a part in any such action. He also conveniently sold most of his stock in the company when its price was on the high end of its roller coaster. It could be the plaintiffs left him out in order to keep his substantial financial big guns from firing back at them.
More lawsuits are expected however, and we should not be surprised if both Branson and Palihapitiya get included at some point.
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Capitalism in space: In what will likely be the first in a number of similar legal actions, a lawsuit was filed against Virgin Galactic earlier this month accusing the company and a number of upper management individuals of securities fraud.
A class action lawsuit was filed in New York on Dec. 7 alleging securities fraud by Virgin Galactic, which went public on the New York Stock Exchange (NYSE) in October 2019 after merging with Chamath Palihapitiya’s Social Capital Hedosophia (SCH).
Named in the lawsuit are Virgin Galactic Holdings, CEO Michael Colglazier, former CEO George Whitesides, former current chief financial officer Doug Ahrens, and former chief financial officer Jon Compagna.
The lawsuit was filed amid years-long delays in the start of commercial human suborbital flights that have caused a sharp decline in the value of the stock. Virgin Galactic began trading on the New York Stock Exchange at an opening price of $12.34 on Oct. 28, 2019. The stock is now trading at $14.46 having previously soared to a high of $62.80.
The article description of the condition of the company’s WhiteKnightTwo carrier plane and its suborbital craft VSS Unity suggests that the likelihood of further tourist flight could be low.
It is also interesting that Richard Branson is not named, as he clearly played a part in any such action. He also conveniently sold most of his stock in the company when its price was on the high end of its roller coaster. It could be the plaintiffs left him out in order to keep his substantial financial big guns from firing back at them.
More lawsuits are expected however, and we should not be surprised if both Branson and Palihapitiya get included at some point.
Readers!
Please consider supporting my work here at Behind the Black. Your support allows me the freedom and ability to analyze objectively the ongoing renaissance in space, as well as the cultural changes -- for good or ill -- that are happening across America. Fourteen years ago I wrote that SLS and Orion were a bad ideas, a waste of money, would be years behind schedule, and better replaced by commercial private enterprise. Only now does it appear that Washington might finally recognize this reality.
In 2020 when the world panicked over COVID I wrote that the panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Only in the past year have some of our so-called experts in the health field have begun to recognize these facts.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
I can hardly wait to see that arrogant, smug, smirking, lying, master con man, Branson, in the dock. Hope they give him a haircut. Damages, punitive fine and banned from the stock markets
Don’t get me angry, or I’ll REALLY tell you what I think about him
Branson is not named in the suit.
So looking at his shares in Virgin Galactic from when it went public, he owned 59%, and now he (or his holding company) only owns 11%. His numerous sales of stock this year was claimed to keep his airline up and running. I don’t know how much of a defense that is, but I am sure an army of accountants will be needed to sort it out.
“Branson is not named in the suit.”
I know, but this will not be the only suit. You can bet on that
“So looking at his shares in Virgin Galactic from when it went public, he owned 59%, and now he (or his holding company) only owns 11%”
Can you say Pump n Dump, kiddies?
I’m reading the complaint, and it includes some pretty alarming allegations about manufacturing and quality control issues at VG. Some of them have been reported before, but the complaint goes into more detail and more instances that I’ve seen in previous press reporting about VG. Also, I’m not sure if this is old news, but apparently Scaled Composites was originally contracted just to deliver the vehicles themselves, not a full package of engineering drawings and technical data, meaning that VG & The Spaceship Company have essentially no ability to produce more vehicles unless they completely reverse-engineer their own aircraft. That might be acceptable if they were intended to be operational vehicles and VG was just going to operate them like an airline, but apparently Scaled Composites made quite clear that the vehicles were intended as test prototypes only, not to be used for commercial service.
The complaint itself is a bit sketchy, though. It repeatedly refers to Richard Branson as “Defendant Branson” even though he is not actually named as a Defendant in the complaint. I think maybe they intended to include him when they initially wrote the complaint, then for some reason decided to drop him, but failed to proofread the whole document. That doesn’t give me great confidence in the quality of the lawyers bringing this case, which is a pity, because it’s a case that deserves to be well-argued with attention to detail.
Also, it’s worth noting that although Doug Messier is reporting the suit as having been filed on Dec. 7, it was actually originally filed in May, and the Dec. 7 date refers to the filing of a much longer, more detailed amended complaint. I haven’t read the original complaint, but it was only 20-something pages long, compared to over 150 for the new amended version.
Anyone interested in reading it can get the complaint from Pacer for about $3. Mr. Zimmerman, if you’d like I could also e-mail you a .pdf file of it and save you the three bucks. It’s pretty interesting reading, but all things considered it’s still 150 pages of lawyering, so reader beware.
Do your dirt-then let someone else swing for it as a scapegoat…that’s how frauds set up true believers. Typical businessmen.
“Do your dirt-then let someone else swing for it as a scapegoat…that’s how frauds set up true believers. Typical businessmen.”
Yes indeed. Lets just nationalize everything, and stop this…
Right comrade?
“””Do your dirt-then let someone else swing for it as a scapegoat…that’s how frauds set up true believers. Typical businessmen.”””
Translation: I have no idea what the difference is between frauds and businessmen, so businessmen must be vilified.
Reality. The vast majority of businessmen also suffer from the predations of fraudsters that garner public notice as well as defrauding the businesses themselves.
Col Beausabre– “hope they give him a haircut” LOLOLOL
I knew when the great Sir Richard created yet another “virgin” company out of that shaky air-launched concept, that a whole lot of people were going to get snookered. Looks like the chickens are coming home to roost.
Concerned,
Do not laugh to hard. If he has been playing fast and loose with investor money, he could find his companies with very little capital.
And the discovery process could open some ledgers he does not want people to see.
This is all a big of, of course, but to go after Branson, they have to feel confident about their position.
Don’t confuse the success of VG to put something in orbit with proper fiscal management. Those filing suit are not.
Arg.. typo. “big if” not “big of”…