Stable Road Acquisition Corp. (SRAC) Made Misstatements Regarding its Business Prospects
On October 7, 2020, Stable Road and Momentus issued a joint press release announcing that Stable Road had agreed to acquire Momentus in a proposed merger and touting the “compelling opportunity to create value through our investment.” Stable Road and Momentus founder Mikhail Kokorich highlighted Momentus’s “Groundbreaking Water Propulsion Technology,” which had been “[s]uccessfully tested … on a demo flight launched mid-2019.” What the defendants failed to disclose, however, was that Momentus’s 2019 test of its key technology – a water plasma thruster – had failed to meet Momentus’s own public and internal pre-launch criteria for success, and was conducted on a prototype that was not designed to generate commercially significant amounts of thrust. Further, Stable Road failed to disclose that the U.S. government conveyed that it considered Kokorich a national security threat, which jeopardized his continued leadership of Momentus. Stable Road failed to conduct due diligence in connection with the merger and as a result, the revenue projections and business and operational plans provided to investors regarding Momentus and the viability and timeline of its products were materially false and misleading.
On January 25, 2021, Kokorich resigned his position as CEO of Momentus “to expedite the resolution of U.S. government national security and foreign ownership concerns surrounding the Company.” On this news, the price of Stable Road securities fell $3.75, or 19%, over a three-day period to close at $20.10 on January 27, 2021. On July 13, 2021, the SEC announced charges against Stable Road, Momentus, and individual defendants for making “misleading claims about Momentus’s technology and about national security risks associated with Kokorich.” The same day, the SEC also publicized a cease-and-desist order and complaint against Kokorich, which detailed defendants’ scheme to defraud investors in connection with the merger. On this news, the price of Stable Road securities fell again by $1.22 per share, or 10%, to close at $10.66.
If you purchased shares of Stable Road Acquisition Corp. (SRAC, SRACW, SRACU) between October 7, 2020 and July 13, 2021, you have until September 13, 2021, to ask the court to appoint you lead plaintiff for the class.
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