Lucid has had a lawsuit dismissed that claimed it had defrauded investors in the special-purpose acquisition company (SPAC) that helped take it public in 2021.
The proposed class action was brought by Churchill Capital Corp IV shareholders and asserted that Lucid chief executive Peter Rawlinson had made misleading statements while speaking on February 5, 2021 during CNBC’s ‘Squawk on the Street.’ During this interview, Rawlinson claimed that Lucid was expected to produce between 6,000 and 7,000 examples of the Air sedan in 2021 and that it had “already built” a factory.
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U.S. District Judge Yvonne Gonzalez Rogers notes that as Churchill and Lucid had yet to discuss a merger by this date, SPAC investors who saw their shares fall in value by 50 per cent in the two days after the February 22 merger, had no standing in suing Lucid, Reuters reports. The decline in Churchill’s stock price was triggered by the carmaker revealing that it only expected to produce 577 units in 2021 and that its factory was not built.
“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,” the judge wrote.
Judge Rogers added that changes in Churchill’s stock price before the merger reflected “the public’s perception of the likelihood of the merger, not its actual likelihood. The latter is what matters.”
