Inside trading suit filed against Virgin Galactic
March 7, 2022
By Chris Forrester
Sir Richard Branson and Chamath Palihapitiya, the former chairman of Branson’s Virgin Galactic rocket tourism company, who unexpectedly stepped down in February, have been accused of issuing misleading information to shareholders over the company’s share float and how it was financed.
The investor lawsuit, filed February 21st by Virgin Galactic shareholder Thomas Spiteri, seeks damages from the space travel company’s directors and others in management and alleges insider trading. The lawsuit alleges that Branson pocketed $301 million by selling shares while their value was artificially inflated.
Palihapitiya was one of Branson’s team who helped take Virgin Galactic public in 2019. Upon its flotation, its shares were trading at $11.50 but quickly rose to $62.80 on the prospect of a buoyant interest in space tourism. The shares have since near-collapsed, and last week were trading at just $7.84.
A number of disaffected investors have hit Virgin with lawsuits and last week a judge ruled that the insider trading allegations can proceed.
Virgin Galactic, on its latest briefings, says it has some 750 customers waiting for space tourism flights, who have paid deposits for tickets valued at $450,000 per seat.