Archer Aviation (Palo Alto) - the US developer of electric vertical takeoff and landing (eVTOL) aircraft - and certain of its officers and directors may face class action following investigations over alleged securities fraud, unlawful business practices, and potential breaches of fiduciary duty to their shareholders, US law firms advised.
This followed allegations by The Grizzly Report that Archer relied on heavily edited videos of flights to "misrepresent the amount of flight testing the company actually performs, and to misrepresent the sophistication of Archer's eVTOL aircraft," said law firm Pomerantz, investigating the claims on behalf of Archer Aviation investors. Following The Grizzly Report, New York Stock Exchange-listed Archer's stock price fell USD0.41 per share, or 6.46%, to close at USD5.94 per share on August 16, 2023.
Pomerantz, a leading corporate securities and antitrust class litigation expert, has asked investors to join a potential class action against the manufacturer, whose eVTOL aircraft are pending Federal Aviation Administration (FAA) approval before they can enter commercial operation.
In a separate statement, Levi & Korsinsky advised Archer Aviation stockholders it had commenced investigations into potential breaches of fiduciary duty by the company's board of directors. The law firm specialises in prosecuting securities litigation involving financial fraud.
ch-aviation has reached out to Archer Aviation for comment.
According to its latest financial report, the company is working to certify its production aircraft - the 12-propeller Midnight that can carry four passengers - in late 2024 for entry into commercial service in 2025.
Earlier this month, Archer Aviation announced a USD215 million investment from its long-term strategic partner Stellantis, United Airlines, Boeing, ARK Invest, and other financial institutions. This brought its total funding to date to more than USD1.1 billion. Stellantis alone has agreed to provide up to USD150 million in equity capital for potential draw by Archer Aviation at its discretion in 2023 and 2024.
Archer Aviation also has a purchase agreement with United for USD1.5 billion worth of eVTOL aircraft and has been working with the airline to commercialise the Midnight. In August 2022, United paid USD10 million in pre-delivery payments for 100 aircraft covered under the purchase agreement.
Archer Aviation also announced a landmark agreement with the United States Department of Defense valued at USD142 million, but The Grizzly Report claimed the DoD contract was a non-competitive award with indefinite quantity and indefinite delivery, meaning the revenue could be minimal and was also capped at USD1.3m in 2023.
