The securities class action case alleges that Stable Road misrepresented and concealed material facts about its acquisition target, Momentus, a company that purports to operate in the commercial space industry. In connection with the SPAC merger, the Company falsely represented that Momentus "successfully tested" its key technology in space when, in fact, the tests were not successful. Further, the Company concealed that Momentus' CEO Mikhail Kokorich presented a national security risk and misrepresented and concealed the shoddy due diligence Stable Road conducted on Momentus.
The truth began to emerge on Jan. 25, 2021, when Momentus announced the abrupt resignation of Kokorich as CEO. Then, on July 13, 2021, the SEC announced charges against Stable Road, Momentus, Kokorich and others for making "misleading claims about Momentus' technology and about national security risks associated with Kokorich." The release stated that all parties other than Kokorich had settled the charges against them for $8 million in total, while the case against Kokorich continued. The same day, SEC also publicized a cease-and-desist order and complaint against Kokorich, which detailed the Company's scheme to defraud investors in connection with the Momentus SPAC merger.
These disclosures caused the price of Stable Road securities to decline sharply, injuring investors.