In Max Royal LLC v. Atieva, Inc., No. 23-16049, 2024 U.S. App. LEXIS 19910 (9th Cir. Aug. 8, 2024), the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a securities class action brought by investors who purchased shares of the special purpose acquisition company Churchill Capital Corporation IV (“CCIV”) in early 2021 before it merged with Atieva, Inc. d/b/a Lucid Motors (“Lucid”) in July 2021. The three-judge panel held that purchasers of a security of an acquiring company do not have standing under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), to sue the target company for alleged misstatements by the target company made prior to the merger between the two companies. The Court’s decision provides protection to target company executives speaking to the press about their company’s forecasts and capabilities prior to acquisition by tightening the standing requirements for pre-acquisition SPAC investor plaintiffs.
