Investors investigation in connection with statements released following the August 26, 2021, business combination between Volta Industries, Inc., a private entity, and Tortoise Acquisition Corp. II, a special purpose acquisition company (SPAC), pursuant to which the combined entity was named Volta Inc. On March 3, 2022, Volta pre-announced an expected $69.7 million net loss for its quarter. The loss stems from the understatement of stock-based compensation resulting in a restatement of its third quarter 2021 financial results. Soon after, the company announced that its founders Scott Mercer (CEO) Christopher Wendel (President) resigned, causing the company stock price to drop dramatically.
Volta announces that its founder Scott Mercer chief executive officer (CEO) and its co-founder and president Chris Wendel, have resigned. The resignation follows the disclosure of a material weakness in the company’s internal control over financial reporting related to understated compensation. Volta previously reported that the material error led to a restatement and the increase of a reported net loss by $26.1 million.
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This is a class action on behalf of persons and entities that purchased or otherwise acquired Volta securities between August 2, 2021 and March 28, 2022, inclusive.
According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors:
(1) that Volta had improperly accounted for restricted stock units issued in connection with the August 26, 2021, Volta Industries, Inc. and Tortoise Acquisition Corp. II business combination;
(2) that, as a result, the company had understated its net loss for third quarter 2021;
(3) that there were material weaknesses in the company’s internal control over financial reporting that resulted in a material error;
(4) that, as a result of the foregoing, the Company would restate its financial statements;
(5) that, as a result of the foregoing, Legacy Volta’s founders would imminently exit the company;
(6) that, as a result, the company’s financial results would be adversely impacted; and
(7) that, as a result of the foregoing, defendants’ positive statements about the company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
The lead plaintiff deadline has passed, we will update this page as the lawsuit progresses
A securities class action lawsuit is a lawsuit on behalf of investors considered in a similar position, who purchased or sold securities of a company during a certain period and suffered losses because of an alleged wrongdoing. Security is often broadly defined to include bonds, stocks, options, derivatives, and other instruments.
Section 10b of the Securities Exchange Act of 1934 makes it unlawful to “use or employ, in connection with the purchase or sale of any security” a “manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” 15 U.S.C. § 78j(b). It is therefore forbidden to: employ any device, scheme, or artifice to defraud; make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made not misleading; or engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
Generally, to be successful, the plaintiff must plead the following:
We invite you to read this article from the American Bar Association which, although from 2014, provide ample information to explore the world of class actions brought under section 10b of Securities Exchange Act of 1934.
Section 11 of the Securities Act of 1933 provides “an express right of action for damages . . . when a registration statement contains untrue statements of material fact or omissions of material fact.” (Thomas Lee Hazen, Treatise on the Law of Securities Regulation, §7.3 at 581 (4th ed. 2002)). Practically, buyers in an initial public offering (IPO), relying on the registration statement and prospectus, are given the right to file a complaint against the company and other signatories for losses sustained as a result of the deficient registration statement and prospectus.
Generally, at least four elements must be plead for the claim to survive:
A shareholder derivative lawsuit is a lawsuit brought by a shareholder of a company, on behalf of the company, against an insider (director, board of directors, executives) or a third-party to redress wrongs and harms to the company. Simply speaking, this mechanism exists because one cannot expect directors and insiders to sue themselves for harms they have done to the company.
The Private Securities Litigation Reform Act (PSLRA) of 1995 was enacted to tighten requirements for securities class actions to be brought in the United States. One of the mechanism put in place was a 60-day period, following the filing of the initial securities class action, for any shareholder considered in similar position to the one filing the initial class action complaint, to ask to be named lead plaintiff. Practically, any time a securities class action falling under the PSLRA is filed with a court, law firms advertise their willingness to pursue the case and invite other investors similarly situated to contact them.
The lead plaintiff in a securities class action is a shareholder who suffered losses related to the purchase or sale of a company’s security during a certain period of time, that is appointed with its choice of counsel to represent the rest of the similarly situated shareholders. To be appointed lead plaintiff, you need to contact a law firm, have them examine your losses and agree to be represented by them and ask to make a motion with the court to be appointed lead. The court will then look at all the motions from the different shareholders and make its decision based on a certain set of criteria. Your inability to be lead plaintiff shall not prevent you from any potential recovery in the event of a settlement.
A class period is a set period of time during which the purchasers or sellers of a company’s security claim in a class action lawsuit to have suffered losses. Class periods are based on the merits of the case and may evolve with the litigation.
A class action complaint will define the initial class of investors: the class period and the persons included in the class. You should look at the definition of the class to determine whether you are included or not. However, the class definition will evolve with the litigation. Its definition is very likely to change between the initial complaint filed and the possible settlement. Generally speaking, you should rely on the definitions of the class stated in a stipulation of settlement to determine whether or not you will be entitled to any recovery (see below about the opting-out mechanism).
You may. The mechanism is called opting-out of class. A lead plaintiff will agree on the potential recovery ratio in a settlement. You may have an interest in opting-out of a class if you have sustained large losses and believe bringing a separate lawsuit would entitle you to a larger ratio of recovery.
You may be able to bring a claim to arbitration in certain scenarios. We encourage you to contact a law firm of your choice to inquire about such alternative dispute resolution mechanism.