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.