May 28, 2021 - An investor in shares of Virgin Galactic Holdings, Inc. (NYSE: SPCE) filed a lawsuit in the U.S. District Court for the Eastern District of New York over alleged violations of Federal Securities Laws by Virgin Galactic Holdings, Inc. in connection with certain allegedly false and misleading statements made between October 26, 2019 and April 30, 2021.

Las Cruces, NM based Virgin Galactic Holdings, Inc., an integrated aerospace company, develops human spaceflight for private individuals and researchers in the United States. On October 25, 2019, post-market, Virgin Galactic Holdings, Inc. was formed via a business combination between Social Capital Hedosophia Holdings Corp. ("SCH"), a special purpose acquisition company ("SPAC"), and the Company's then-private predecessor, after which SCH changed its name to "Virgin Galactic Holdings, Inc." and its ticker symbol to "SPCE" (the "Business Combination").

On April 12, 2021, the Securities and Exchange Commission (“SEC”) issued guidance advising that SPAC warrants, which are instruments that allow investors to buy additional shares at a fixed price, may need to be classified as liabilities rather than equity for many SPAC transactions, which had previously been accounted for as equity in these deals. On April 30, 3021, post-market, Virgin Galactic Holdings, Inc. announced "that it has rescheduled the reporting of its financial results for the first quarter 2021 to following the close of the U.S. markets on Monday, May 10, 2021. Virgin Galactic will now host a conference call to discuss the results and provide a business update that day at 2:00 p.m., Pacific Time (5:00 p.m., Eastern Time). The Company is rescheduling its reporting due to the recent statement issued by the [SEC] on April 12, 2021 relating to the accounting treatment of warrants issued by special purpose acquisition companies (the 'SEC Statement')."

The press release further advised that "following its review of the SEC Statement and consulting with its advisors, the Company will restate its consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The restatement is due solely to the accounting treatment for the warrants of Social Capital Hedosophia Holdings Corp. that were outstanding at the time of the Company's business combination on October 25, 2019.

The Company expects to file the restated financials prior to the new conference call date and estimates that it will recognize incremental non-operating, non-cash expense for each of the fiscal years ended December 31, 2020 and December 31, 2019."

Shares of Virgin Galactic Holdings, Inc. (NYSE: SPCE) declined to as low as $14.27 per share on May 11, 2021.

According to the complaint the plaintiff alleges on behalf of purchasers of Virgin Galactic Holdings, Inc. (NYSE: SPCE) common shares between October 26, 2019 and April 30, 2021, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between October 26, 2019 and April 30, 2021, the defendants made false and/or misleading statements and/or failed to disclose that for accounting purposes, SCH's warrants were required to be treated as liabilities rather than equities, that Virgin Galactic had deficient disclosure controls and procedures and internal control over financial reporting, that as a result, the Company improperly accounted for SCH warrants that were outstanding at the time of the Business Combination, and that as a result, the Company's public statements were materially false and misleading at all relevant times.