Route Stable SRAC,
– a special purpose acquisition company, or SPAC – agreed to merge with Momentus Inc., a start-up space exploration company, last fall for an enterprise value of approximately $ 1.2 billion . The SEC said in a statement Tuesday that former Momentus chief executive Mikhail Kokorich claimed Momentus had successfully tested its technology in space, but in fact its only test in space had failed, and that the parties have distorted national security concerns over Kokorich that could prevent the company from receiving government contracts, with all false allegations included in SEC files.
The SEC plans to move forward with the charges against Kokorich, while the other named parties – Stable Road, its sponsor as well as CEO Brian Kabot and Momentus – have agreed to settle the collective civil penalties charges of more than $ 8 million as well as certain protections and other penalties.
See also: More money flowing into the space industry
The SEC has taken a closer look at PSPCs since the funding mechanism exploded during the COVID-19 pandemic, leading another space exploration company, Virgin Galactic Inc. SPCE, to
public markets with the sports games company DraftKings Inc. DKNG,
a multitude of electric vehicle companies and many more.
Read more: PSPCs aren’t dead, but they don’t look very healthy
“This case illustrates the risks inherent in PSPC transactions, as those who could derive significant profits from a PSPC merger may exercise inadequate due diligence and mislead investors,” said SEC Chairman Gary Gensler, in a statement. “Stable Road, a SPAC, and its merger target, Momentus, have both misled the investing public. The fact that Momentus lied to Stable Road does not relieve Stable Road of its inability to exercise due diligence to protect shareholders. “
The SEC has filed a lawsuit against Kokorich in the United States District Court for the District of Columbia, which seeks to prohibit him from acting as an officer or director of a state-owned company, as well as other penalties. The complaint says Kokorich, a Russian citizen, left the United States on January 27, two days after resigning as CEO of Momentus, based in Santa Clara, California. The 45-year-old currently resides in Switzerland, according to the complaint.
After closing 4.9% lower at $ 11.88 per share, Stable Road shares fell below $ 10.50 per share during the extended trading session on Thursday.