Space startup Momentus charged by SEC with misleading investors

Space transportation startup paid $7 million to settle

Securities and Exchange Commission on Tuesday Was accused Space infrastructure startup Momentus Space and its founder Mikhail Kokorich allegedly misled investors about its propulsion technology and downplayed the national security concerns of regulators associated with Kokorich, who is Russian.

The SEC also accused the company, Stable Road Acquisition Corp., that was going to acquire Momentus as part of a deal to take the startup public (and bypass the IPO process). Stable Road Acquisition Corp. is a SPAC, a company that exists only to purchase another company; Stable Road CEO Brian Cabot and its sponsor SRC-NI have also been accused by the SEC. Everyone except Kokorich settled the charges with the SEC and paid the fine.

Momentus, established in 2017, aims to provide a “last-mile” transportation service for satellites already in orbit, using a unique water-based propulsion system to pull satellites into other orbits. According to the SEC, Momentus incorrectly told investors that it had “successfully tested” its technology in space; In fact, the company once tested its technology in space, and failed. According to the SEC, Stable Road never reviewed the results of this test, even though it claimed that it took “extensive due diligence”. Kokorich was a national security risk.

SEC Chairman Gary Gensler said in a statement, “This case illustrates the inherent risks in a SPAC transaction, because those who stand to make significant gains from the SPAC merger may perform insufficient due diligence and mislead investors.” can.”

Momentus paid $7 million to settle; Stable Road paid $1 million, and Cabot paid $40,000. If its proposed SPAC merger closes — expected in August, months later than its initial target of early 2021 — the SEC will “forfeit the compliant investor protection undertaking, and the SPAC sponsor’s founder’s shares,” in the SEC statement. Having said.

US officials worry that Momentus’ technology could fall into the hands of foreign adversaries, which has launched a lengthy investigation and delayed its plans to go public, because Kokrich is Russian. Kokorich resigned as CEO in January to address national security concerns from Momentus. The estimated value of the company has been reduced from $1.1 billion to just $566.6 million. A revised revised registration details Stable Road filed with the SEC last month.

stable road June filing, in which it downgraded the value of Momentus, noted that the company’s technology was still nascent, and that “the technology underlying its anticipated service offerings (including its water plasma propulsion technology) is still in the process of being developed and fully developed.” Not tested in kind or validated in space.”

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