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