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USA's SEC sues over space SPAC.

BIScom Subsection: 
Author: 
Nigel Morris-Cotterill

From an SEC press notice, 13th July 2021 (slightly edited)

"The Securities and Exchange Commission today announced [proceedings] against special purpose acquisition corporation Stable Road Acquisition Company, its sponsor SRC-NI, its CEO Brian Kabot, the SPAC’s proposed merger target Momentus Inc., and Momentus’ founder and former CEO Mikhail Kokorich [alleging] misleading claims about Momentus’ technology and about national security risks associated with Kokorich. "

From the SEC (edited):

The SEC’s order finds that Momentus breached scienter-based anti-fraud provisions of the federal securities laws and caused certain of Stable Road’s breaches. It also finds that Stable Road breached negligence-based anti-fraud provisions of the federal securities laws as well as certain reporting and proxy solicitation provisions.

The order finds that Kabot breached provisions of the federal securities laws related to proxy solicitations and that Kabot and SRC-NI caused Stable Road’s breach of Section 17(a)(3) of the Securities Act of 1933.

Without admitting or denying the SEC’s findings, Momentus, Stable Road, Kabot, and SRC-NI consented to an order requiring them to cease and desist from future breaches. Momentus, Stable Road, and Kabot will pay civil penalties of USD7 million, USD1 million, and USD40,000, respectively.

Momentus and Stable Road have also agreed to provide PIPE (private investment in public equity) investors with the right to terminate their subscription agreements prior to the shareholder vote to approve the takeover; SRC-NI has agreed to forfeit 250,000 founders’ shares it would otherwise have received upon consummation of the business combination; and Momentus has agreed to undertakings requiring enhancements to its disclosure controls, including the creation of an independent board committee and retention of an internal compliance consultant for a period of two years.

The SEC’s complaint against Kokorich alleges that Kokorich breached anti-fraud provisions of the securities laws and aided and abetted Momentus’ breaches of the same provisions. The complaint seeks permanent injunctions, penalties, surrender of proceeds plus pre-judgment interest and an officer-and-director ban against Kokorich.

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