Stanford Law Professor Michael Klausner’s legal push aimed at showing SPACs are a rip-off for everyday investors is going as well as he could have hoped. And some fear it’s going too well, Bloomberg Law reports.
Klausner and Grant & Eisenhofer lawyers won a ruling last week allowing their case against a SPAC, GigCapital3 Inc., to move toward trial.
The Delaware Chancery Court ruling essentially rubber-stamped Klausner’s conclusions about the murky economics of SPACs.
Klausner’s victory is important because his criticisms are applicable, in varying degrees, to every SPAC merger — and there were lots of them.
There were 301 completed SPAC mergers in 2021 and 2022, valued at more than $650 billion, according to SPAC Research. Virtually all those companies’ shares have performed poorly post-merger, a factor that would help lawyers calculate potential damages.
Among nearly 250 completed SPAC deals as of mid-2022, only four were trading above their initial offering price, according to Valuation Research Corp.
But it’s an open question if plaintiff’s firms will bring a wave of similar cases based on Klausner’s research. Read more.
