A group of investors in the Special Purpose Acquisition Company (SPAC) FG New America Acquisition Corp. (FGNA) filed a lawsuit against several of its executives and directors, accusing them of overselling the value of merger target Opportunity Financial. The lawsuit comes after the value of Opportunity Financial (“OppFi”) plummeted by approximately 80% following the completion of the take-public transaction.​

Former FGNA shareholder Sean Murray lodged the complaint in Delaware Chancery Court, naming the SPAC and certain officers and other board members as defendants. The suit is on behalf of all record and beneficial holders of FGNA common stock who held such stock on the redemption deadline of July 14, 2021, and did not redeem all such shares.​

Kehoe Law Firm Partner Michael Yarnoff, who represents the plaintiffs, expressed confidence in the merits of the lawsuit. “The complaint outlines serious breaches of fiduciary duties and misrepresentations that have harmed the interests of OppFi SPAC investors,” Yarnoff stated. “We believe the evidence strongly supports the allegations, and we are committed to pursuing justice for our clients.” ​

Murray alleges that FGNA and the individual defendants failed to uphold basic principles of Delaware corporate governance, prioritizing their own financial interests over those of the company’s stockholders. The lawsuit contends that decisions were made with a disregard for fiduciary duties, resulting in a value-destructive merger with Opportunity Financial.​

In the complaint, Murray asserts that the defendants granted themselves financial interests misaligned with public stockholders and forced through the merger based on false and misleading disclosures. The lawsuit highlights the issuance of approximately 6.4 million shares of FGNA Class B common stock to the SPAC’s sponsor, FG New America Investors LLC, and the subsequent transfer of 1.2 million “founder shares” to FGNA’s directors and management.​

The complaint contends that these founder shares became valuable only if FGNA closed a merger, creating a strong incentive for the defendants to pursue a business combination and avoid liquidation. This, the plaintiffs argue, compromised the decision-making process and led to a deal that was not in the best interests of public stockholders.​

Notably, Murray alleges that FGNA’s negotiations with Opportunity Financial were tainted by financial conflicts, and the board served merely as a “rubber stamp.” The lawsuit claims that the proxy statement issued by FGNA omitted crucial information about the merger’s value, including high dilution of FGNA shares and misleading representations about Legacy OppFi’s financial projections.​

For more information about Kehoe Law Firm and its involvement in this matter, please contact Michael Yarnoff at [email protected] or call (215) 792-6676.

KLF is pleased to announce that our client, FX Primus Ltd., a leading financial services company, scored a significant legal victory before the Second Circuit Court of Appeals. The Second Circuit affirmed the district court’s prior decision, upholding the rejection of most of the claims brought by AMA Capital, LLC (“AMA”) in an antitrust class-action settlement.​

The settlement agreement in question mandated that claimants provide transactional records to support their claims, with the claims administrator having the discretion to deem documents acceptable. AMA’s claims were rejected, primarily due to its failure to provide the required records. The district court concurred with this decision and denied AMA’s motion for reconsideration.​

On appeal, AMA contended that the district court erred by not considering documents submitted during the post-rejection contest process and by applying improper evidentiary requirements. The Second Circuit Court of Appeals, however, affirmed the district court’s orders, determining that the claims administrator was not obligated to accept records during the contest process if they were previously available to AMA. The court also found no error in the district court’s denial of AMA’s claims.​

Partner John A. Kehoe, representing FX Primus Ltd., expressed satisfaction with the outcome, stating, “This decision reaffirms the integrity of the settlement agreement, which required claimants to substantiate their claims with acceptable documents. The court’s ruling underscores the importance of adhering to the stipulated procedures and evidentiary requirements outlined in the settlement agreement.”​

The Kehoe Law Firm remains committed to upholding the principles of fairness and adherence to legal processes in financial matters. The successful resolution of this appeal further reinforces our dedication to ensuring the integrity of class-action settlements.

For more information about the FX indirect purchaser antitrust litigation and the related settlement, please visit the claims administrator’s website, available here:

https://www.fxindirectantitrustsettlement.com/

For more information about Kehoe Law Firm and its involvement in this matter, please contact John A. Kehoe at [email protected] or call (215) 792-6676.

Southeastern Pennsylvania Transportation Authority Pension Plan and Teamsters Local 710 have moved to intervene in the Abbott Inc. Derivative Litigation pending in the Northern District of Illinois. The lawsuit, filed in October 2022, alleges wrongdoing by certain officers and directors of Abbott at least during the period from November 19, 2021, through June 8, 2022.​

Specifically, the Individual Defendants are alleged to have breached their fiduciary duties and to have violated federal securities laws by concealing lapses in safety protocols at Abbott’s Sturgis, Michigan facility. These lapses resulted in environmental contamination with Cronobacter sakazakii bacteria, a critical issue affecting the manufacturing of infant formula.​

In February 2022, the FDA reportedly confirmed Cronobacter contamination at the Sturgis facility, leading to a recall of various infant formula products. According to the complaint, Abbott executives portrayed the recall as a proactive measure to protect the public, not disclosing the FDA investigation.

Abbott eventually closed the Sturgis facility due to safety concerns, causing massive formula shortages in the U.S., Canada, and other markets. The federal government invoked the Defense Production Act to address the shortages. ​

In May 2022, the Senate Finance Committee launched an investigation into Abbott’s international tax practices and stock buybacks, linking them to the Sturgis facility issues.  Not until June 2022 did Abbott disclose that it was aware of the whistleblower complaint in early 2021, contributing to a decline in the company’s stock price.​

The actions during the Relevant Period led to significant repercussions, including stock decline, a class action lawsuit, and potential liability exposure for Abbott.

SEPTA and Teamsters Local 710 have moved to intervene in this derivative action, captioned In Re Abbott Laboratories Infant Formula Shareholder Derivative Litigation, 1:22-CV-5513 (N.D. IL), thereby demonstrating their commitment to protecting shareholder interests and holding Abbott’s officers and directors accountable for alleged misconduct.​

John A. Kehoe, Partner at Kehoe Law Firm, commented: “We are pleased to see Southeastern Pennsylvania Transportation Authority Pension Plan and Teamsters Local 710 take a stand in intervening in the Abbott shareholder derivative action. Institutional shareholders play a crucial role in holding corporations accountable for their actions and advocating for positive governance reforms. This intervention marks a step towards transparency, accountability, and responsible corporate practices.” 

For more information about Kehoe Law Firm and its involvement in this matter, please contact John A. Kehoe at [email protected] or call (215) 792-6676.