He sold 10 million shares of Virgin Galactic Holdings Inc. for $315 million before abruptly leaving the board last month, a shareholder says in a lawsuit. Palihapitiya was chairman of Virgin Galactic Holdings Inc. at the time.
As part of the complaint, which was filed on behalf of Virgin Galactic, the complaint says that founder Richard Branson made $301 million by selling his shares when the stock price was “artificially high.”
Leaders of the company knew about flaws in its spacecraft three years before they were made public last year, according to a complaint filed in federal court in Brooklyn, New York.
Virgin Galactic has been trying to make space flight more commercial since 2004, and last year they were approved by the government to fly people into space. People aren’t sure what to make of the company’s stock. It has put off commercial flights because of an investigation and parts that might be defective.
Ex-Facebook executive Palihapitiya, who has raised billions of dollars through blank-check firms, has been called the “SPAC King” because of how he used the investment tool to make companies public and raise money. 2019 was the year Virgin Galactic started trading. Palihapitiya’s Social Capital Hedosophia was merged with Virgin Galactic.
Virgin Galactic has said that the flights of its Eve and Unity spacecraft were successful, but they were actually “rudimentary prototypes” that didn’t have important engineering documentation, according to a complaint. Some of the documentation had design flaws, the complaint says. Branson and his company have made money when there has been good news, according to the lawsuit.
A representative for Social Capital refused to speak. Branson and Virgin Galactic didn’t answer emails right away.
The complaint isn’t the first one saying that Virgin Galactic executives lied to investors.
Customers will be able to pay to go into space by the end of this year, Virgin Galactic says, and it’s still on track. People have put down deposits for tickets that cost $450,000 to go on a 90-minute trip to space. There are about 750 people who have done this.