Richard Branson must face lawsuit in U.S. over Virgin Galactic space travel problems
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NEW YORK (Reuters) – A U.S. judge on Monday said British billionaire entrepreneur Richard Branson must face shareholder claims he concealed problems in Virgin Galactic Holdings Inc’s spaceship program, and sold hundreds of millions of dollars of stock at inflated prices.
While dismissing most claims in the proposed class action, U.S. District Judge Allyne Ross in Brooklyn said shareholders could try to prove that Virgin and Branson defrauded them into overpaying for the space tourism company’s shares, which now trade more than 90% below their February 2021 peak.
Shareholders can sue over July 2019 statements that Virgin had made “great progress” overcoming “hurdles” to commercial spaceflight, despite a near-disastrous test flight five months earlier when its rocket plane Unity suffered critical damage.
Branson must also defend his July 2021 statement that his own just-completed flight on Unity, where he soared 50 miles (80.47 km) above the earth, had been “flawless” though Unity had strayed from its assigned airspace.
In a 55-page decision, Ross said shareholders also could sue over approximately $301 million of stock that Branson sold the month after the flight.
