Investors in the eVTOL developer Archer Aviation have filed a lawsuit in the United States (US) claiming that the company made “materially false and/or misleading statements” about its progress to commercialization.
The lawsuit was filed on September 21, 2023, but details about the legal action emerged on September 26, 2023, after the Law Offices of Frank R. Cruz, which is representing investors, confirmed more details about the case.
According to the Shareholders Foundation, the lawsuit claims Archer Aviation has “consistently touted the efficacy of its eVTOL aircraft design and flight testing procedures, the profitability of its business partnerships, and its ability to secure from the Federal Aviation Administration (FAA) the necessary regulatory certification for the mass production of aircraft for commercial use”.
The Securities Class Action alleges between September 17, 2021, and August 15, 2023, the following:
- Archer Aviation relied on heavily edited videos of earlier flights to exaggerate the amount of flight testing it had actually performed and the sophistication of its eVTOL aircraft.
- Archer Aviation had misrepresented the nature and profitability of its business partnerships.
- The Company was unlikely to secure FAA certification in the timeframe it had represented to investors, thereby delaying the start of mass production of its aircraft for commercial sales.
- Accordingly, the Company had overstated its financial position and/or prospects.
- All of the foregoing, once revealed, was likely to subject the Company to significant financial and/or reputational harm.
- As a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
The legal action follows a report released by Grizzly Research on August 16, 2023, that claimed Archer was misrepresenting the amount of flight testing actually performed and the date when its eVTOL aircraft ‘Midnight’ will be certified by the FAA.
On this news, Archer’s stock price fell $0.41, or 6.5%, to close at $5.94 per share on August 16, 2023, thereby injuring investors.
In its latest press release Archer Aviation said commercial operations would begin in 2025.
Those with shares in Archer between September 17, 2021, and August 15, 2023, and wish to explore their options are being invited to do so by November 20, 2023.
In an official statement from Archer Aviation sent to AeroTime, a spokesperson said: “We believe the claims are without merit and we intend to defend ourselves vigorously.”