Robbins Geller Defeats Motions to Dismiss in SPAC Securities Class Action
Robbins Geller, along with co-counsel, defeated defendants’ motions to dismiss in a securities class action arising from the financial collapse of Alta Mesa Resources, Inc. (“Alta Mesa”), one of the first cases arising out of the recent wave of blank check financing.
Alta Mesa, f/k/a Silver Run Acquisition Corporation II, was created as a special purpose acquisition company (“SPAC”) for the purpose of acquiring energy assets. The amended complaint alleges that defendants made materially false and misleading statements and omissions to induce shareholders to approve Alta Mesa’s business combination. The complaint specifically alleges that leading up to the merger, defendants misrepresented: inter alia, the target businesses’ claimed oil reserves, production and pipeline capabilities, projected earnings, and internal controls over financial reporting. While insiders reaped over $1.3 billion from the transaction, within a year of closing, Alta Mesa was forced to take a $3.1 billion write down and, ultimately, seek bankruptcy protection after the price of Alta Mesa stock collapsed 99%.
On March 31, 2021, the United States District Court for the Southern District of Texas denied defendants' motions to dismiss in their entirety. In a subsequently issued memorandum and opinion, the Honorable George C. Hanks, Jr. found that the “circumstances surrounding the company’s financial reporting . . . are alone enough to entitle [p]laintiffs to discovery.” Judge Hanks also held that “[p]laintiffs have pled sufficient facts” to adequately allege claims under the Securities Exchange Act of 1934, including as to the SPAC sponsor, Riverstone Holdings LLC.
Robbins Geller recently formed a dedicated SPAC Task Force comprised of experienced securities and M&A lawyers dedicated to rooting out and prosecuting fraud on behalf of injured blank check company investors. Members of the SPAC Task Force led the initial case investigation and developed the claims at issue in Alta Mesa.
To learn more about Robbins Geller’s SPAC Taskforce click here.
Camelot Event Driven Fund, a Series of Frank Funds Trust v. Alta Mesa Resources, Inc., No. 4:19-cv-00957, Memorandum Opinion and Order (S.D. Tex. Apr. 14, 2021).
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