Virgin Galactic Misrepresented Financials Pumping Up Stock Price, Says Investor Class Action Lawsuit

Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.

Virgin Galactic, a company that develops human spaceflight for the wealthy, has been hit with a class action lawsuit accusing it of lying to investors.  

Lead plaintiff, Shane Lavin, filed the nationwide class action lawsuit in New York federal court Tuesday. In it, he claims that Virgin Galactic, along with its executives, misled investors about the company’s compliance with the Securities and Exchange Commission (SEC) starting in October 2019.  

Lavin says that he and other investors took a hit when Virgin Galactic announced that it would be rescheduling its financial reports after an SEC crackdown on how it was classifying the securities it sold starting in October. After this news, Virgin Galactic’s stock sank by more than 9 percent, says Lavin.  

“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” alleges the class action lawsuit.  

Virgin Galactic was formed in 2019 with the goal of developing human spaceflight for private individuals and researchers, explains the class action lawsuit. The company was a conglomeration of three operations: Legacy Virgin Galactic, SPAC, and SCH. When it formed, SCH changed its name to “Virgin Galactic” and its Wall Street ticker symbol to “SPCE.” 

Lavin says that when the company was formed in 2019, the SEC issued guidance on the securities it wanted to sell to investors. The regulator said that SPAC warrants Virgin Galactic was selling to investors, allowing them to buy additional shares at a fixed price, may need to be classified as liabilities, rather than equity.  

The class action lawsuit alleges that the executives at Virgin Galactic ignored the SEC guidance and represented to investors in press releases and media statements that the SPAC warrants were equity. Lavin says that these misrepresentations artificially inflated Virgin Galactic’s stock until the truth came out in April 2021.  

In April, the company allegedly received a statement from the SEC concerning its treatment of the SPAC warrants. As a result, Virgin Galactic had to reschedule its financial report to the public after it corrected its treatment of SPAC warrants as liabilities, rather than equity.  

“Had Plaintiff and the other members of the Class known the truth, they would not have purchased or otherwise acquired said securities, or would not have purchased or otherwise acquired them at the inflated prices that were paid,” alleges Lavin.  

The plaintiff seeks to represent individuals who invested in Virgin Galactic between Oct. 26, 2019, and April 30, 2021. He is seeking damages, along with attorney and court fees.  

Did you purchase Virgin Galactic stock? Did you suffer a loss after the company’s announcement in April? Tell us about it in the comment section below! 

The lead plaintiff is represented by Jeremy A. Lieberman, J. Alexander Hood II, and Thomas H. Przybylowski of Pomerantz LLP, and Peretz Bronstein of Grossman, LLC.  

The Virgin Galactic Investor Class Action Lawsuit is Lavin v. Virgin Galactic Holdings, Inc., et al., Case No. 1:21-cv-03070 in the U.S. District Court for the Eastern District of New York.  

Read About More Class Action Lawsuits & Class Action Settlements:

• ParkMobile Data Breach Exposed 21M Consumers to Fraud, ID Theft, Claims Class Action Lawsuit
• Do You Qualify: PenFed, Axos Bank, BankUnited, Others | Overdraft, NSF Fees Lawsuit Investigation
• Grubhub Investor Files Class Action Lawsuit Over Just Eat Merger
• Do You Qualify: Ringless Voicemail Class Action Lawsuit Investigation