Music Streamer Settles SPAC Fraud Case
Akazoo, a Greek company purporting to be a music streaming service, has agreed to pay back $38.eight million to settle allegations that it defrauded traders equally right before and after it went community through a SPAC merger.
The U.S. Securities and Exchange Commission reported Akazoo grossly misrepresented the mother nature and results of its streaming organization when it raised $fifty four.eight million as a final result of its merger in 2019 with special function acquisition enterprise Modern day Media Acquisition Corp. (MMAC) and while its shares have been traded on the Nasdaq from September 2019 to Could 2020.
Amongst other points, the SEC reported in a civil criticism, Akazoo claimed sixty four.five million euros in earnings in the first 50 % of 2019 from functions in twenty five nations around the world when, in fact, it “generated at most negligible earnings, operated in only a handful of nations around the world, and its only major source of money was the $fifty four.eight million it had raised from traders.”
The settlement of the prices declared on Tuesday will be pleased by Akazoo’s disgorgement of $35 million to traders and payment of settlements of a number of course action lawsuits.
“The SEC is intently targeted on SPAC merger transactions, and we will go on to maintain wrongdoers in this room accountable,” David Peavler, regional director of the SEC’s Fort Truly worth Regional Workplace, reported in a information launch.
As Reuters studies, the commission “has been ratcheting up scrutiny of SPACs … The SEC has issued trader warnings, executed an enforcement sweep of banks concerned in the transactions and has reported it is searching at regulatory modify.”
Ahead of its SPAC merger, Akazoo operated as Akazoo Minimal, a enterprise organized beneath the rules of the U.K. with its principal position of organization in Athens, Greece.
When Akazoo took its present-day sort, it raised $14.2 million from MMAC’s shareholders and yet another $40.six million from accredited traders through a non-public expenditure in community equity (“PIPE”) giving at the time of the merger.
Akazoo’s shares traded as high as $7.49 right before plunging to $1.16 after a shorter-marketing hedge fund introduced a report in April 2020 that concluded it was a finish rip-off, with negligible subscribers and earnings.
