A US District Court dismissed a lawsuit against Lucid in which the company was accused of defrauding investors by overstating its production outlook in a public offering SPAC.
The class action lawsuit was filed by Churchill Capital Corp IV shareholders, and alleged that Lucid CEO Peter Rawlinson made false statements during an interview on February 5, 2021 on CNBC’s “Squawk on the Street.” During the interview, Rawlinson stated that Lucid anticipated producing between 6,000 and 7,000 units of the Air sedan in 2021 and that the company had already constructed a factory.
U.S. District Judge Yvonne Gonzalez Rogers stated that as Churchill and Lucid had not yet discussed a merger by the time of the lawsuit, investors who saw a 50% decrease in the value of their shares in the two days following the February 22 merger, did not have grounds to sue Lucid, according to Reuters. The drop in Churchill’s stock price was caused by the revelation from the carmaker that it only planned to produce 577 units in 2021 and that its factory was not yet constructed.
The court cannot conceive of how plaintiffs could reasonably think a merger was likely when Lucid and CCIV had not even publicly acknowledged that a merger was being considered. (via Reuters)
The merger brought in a significant amount of cash for Lucid, raising $4.4 billion. However, it was soon subject to investigation by the US Securities and Exchange Commission (SEC). Lucid has been cooperating with the SEC in their investigation.
Neither side’s lawyers have made a statement regarding the court’s decision. It is uncertain if the shareholders will appeal the ruling.
