[ad_1]
The U.S. securities regulator fined a space transportation company and a special-purpose acquisition vehicle for misleading investors in the first such crackdown.
The Securities and Exchange Commission accused Momentus and its former CEO Mikhail Kokorich of misleading investors about the company’s technology and the national security risks associated with its Russian founder.
Stable Road Acquisition, the Spac that last year reached an agreement to make Momentus public, was also charged, along with its sponsoring company, SRC-NI Holdings, and its CEO Brian Kabot.
All parties other than Kokorich settled the civil charges and agreed to pay more than $ 8 million in total penalties, the SEC said. The regulator has personally sued Kokorich alleging fraud in the U.S. District Court for the District of Columbia.
Anita Bandy, associate director of the SEC’s enforcement division, said: “The former CEO of Momentus is alleged to have committed fraud by misrepresenting the viability of the company’s technology and its status as a threat to national security “.
Powerful charges could herald wider repression Spacs, which raised more than $ 100 billion last year and helped launch companies into public markets without a traditional listing process.
“This case illustrates the risks inherent in Spac transactions, as those who will reap significant benefits from a Spac merger may conduct improper due diligence and mislead investors,” said Gary Gensler, president of the SEC , in a statement.
Moments and stable road announced a $ 1.2 trillion merger proposal in October, which the two sides billed as the creation of the first publicly traded “space infrastructure company”.
Momentus later testified in the files that it received a citation from the SEC in January for the documents related to the merger. Last month, the company said it resolved a separate review by the U.S. Foreign Investment Committee on property interests previously owned by Kokorich.
The Financial Times previously reported on SEC research on Momentus.
The SEC accused Kokorich and Momentus of telling investors that they had “successfully tested” the company’s technology in space, when in fact the only test had not “achieved its main mission objectives nor demonstrated the commercial viability of the technology “.
The agency also accused both parties of misrepresenting the risk of national security problems for the company’s business, while Stable Road repeated misleading statements in public records and “breached its due diligence obligations with investors.”
SEC officials highlighted the risks to Spacs not meeting their due diligence on their goals, especially when sponsors are running out of time to establish agreements within the two-year limit.
“Lies on the one hand do not absolve the other party’s responsibility to exercise due diligence,” an official said.
The agreement between Momentus and Stable Road, which was revised just last month, he can still move on despite the charges. The companies have agreed to provide investors in private investment in public capital, known as Pipe, termination rights that will allow them to change their investment if they so wish.
Meanwhile, Spac investors will have a chance to see what Pipe investors choose to do before voting on the deal and the sponsor has agreed to lose 250,000 founding shares.
Momentus said: “Momentus and the Stock Exchange Commission have reached an agreement. We are pleased to close this chapter and move forward. “
Kokorich declined to comment. Stable Road and Kabot did not immediately respond to a request for comment.
[ad_2]
Source link
