Virgin Galactic founder Richard Branson and former chairman Chamath Palihapitiya are facing a shareholder lawsuit claiming they profited from selling shares while the stock was artificially inflated and known flaws in the company’s space tourism vehicles were hidden. Yahoo News reports:
The investor lawsuit, filed February 21 by Virgin Galactic shareholder Thomas Spiteri, seeks damages from the space travel company’s directors and others in management.
Palihapitiya took advantage of his role as company chairman to sell 10 million shares for $315 million on “inside information” before he abruptly left his role last month, the derivative action alleges.
Virgin Galactic founder Branson sold 16 million shares for about $458 million while the stock was “artificially inflated,” the complaint said.
Palihapitiya’s Social Capital Hedosophia, a blank check company that was already traded on the New York Stock Exchange, took Virgin Galactic through a merger in October 2019. He served as Virgin Galactic’s chairman before abruptly resigning on Feb. 18, four days before the company’s quarterly earnings call.