A federal judge ruled Monday that Richard Branson must face a lawsuit from Virgin Galactic shareholders who claim he hid issues with the space program and sold inflated stock.

Richard Branson & Rudy Giuliani Visit ″Cavuto″ On FOX Business Network

"Cavuto" was hosted on the FOX Business Network in New York.

Getty Images

The proposed class action lawsuit was dismissed by the U.S. District Judge in Brooklyn, but she allowed shareholders to try to prove that Virgin cheated them into paying an over inflated price for their stock.

In July of this year, Virgin stated that it had made great progress in pursuing commercial spaceflight, even though its rocket plane was critically damaged during a test flight.

Even though the FAA said the rocket deviated from its intended flight path, the class can still file a lawsuit.

According to the ruling, in the month after the flight, Branson sold about $301 million of stock that he could be sued over.

Virgin's lawyers argued for the case to be dismissed, saying there was no proof that there was any intent to deceive shareholders, and that space travel is a high risk proposition.

When Virgin announced it would push back its pursuit of commercial space travel, it applied to shareholders who had stock from July 10 to October 14, 2011.

PLAY Forbes Business Why Apple TV's 'Acapulco,' Now In Its Second Season, Is A Must Watch Comedy Read More Tom Brady Saves Tampa Bay Buccaneers’ Season — And Coaching Jobs — With Game-Winning Drive Read More Roger Penske Becomes First Team Owner To Win Nascar Cup Series And NTT IndyCar Series Championships In The Same Year Read More Read More Read More Read More Read More Read More Read More Read More As New USCG Icebreaker Breaks Shipyard, Bollinger Expected To Take Over Halter Marine Read More The Good, Bad And Ugly From The Green Bay Packers’ Loss To The Detroit Lions Read More 1/1 Skip Ad Continue watching after the ad Loading PodsVisit Advertiser websiteGO TO PAGE Why Apple TV's 'Acapulco,' Now In Its Second Season, Is A Must Watch Comedy

The failure of a test flight that killed co-pilot, Michael Alsbury, was one of the setbacks for Virgin Galactic. After more than a decade of being funded by billionaire Richard Branson, Virgin Galactic went public in October 2019. The company wants to offer short flights to tourists willing to pay a lot of money. In what has been dubbed a " billionaire space race'' between Virgin Galactic, Jeff Bezos' Blue Origin and SpaceX, other companies founded by wealthy businessmen are also competing. Blue Origin has sent up six tourist space flights since the beginning of the year, and the other two companies have launched two.

Forbes Valuation

The "Virgin" brand of businesses, like Virgin Atlantic and Virgin Galactic, are worth an estimated $3.7 billion, according to our estimates.

What To Watch For

When he announced in February that Virgin Galactic would begin taking reservations for $450,000 tickets for space flights, he said the company would begin commercial flights in the spring of 2019.

Richard Branson will face a lawsuit in the US.

The shares of Virgin Galactic surged after the firm announced it would be selling tickets to space.