Music Streamer Settles SPAC Fraud Case
Akazoo, a Greek business purporting to be a audio streaming service, has agreed to pay back $38.eight million to settle allegations that it defrauded buyers the two in advance of and following it went general public by way of a SPAC merger.
The U.S. Securities and Trade Commission stated Akazoo grossly misrepresented the nature and success of its streaming organization when it raised $fifty four.eight million as a final result of its merger in 2019 with particular function acquisition company Fashionable Media Acquisition Corp. (MMAC) and although its shares were being traded on the Nasdaq from September 2019 to May perhaps 2020.
Among other items, the SEC stated in a civil criticism, Akazoo claimed sixty four.5 million euros in profits in the 1st fifty percent of 2019 from functions in twenty five nations when, in actuality, it “generated at most negligible profits, operated in only a couple nations, and its only important resource of cash was the $fifty four.eight million it experienced raised from buyers.”
The settlement of the charges declared on Tuesday will be contented by Akazoo’s disgorgement of $35 million to buyers and payment of settlements of several course action lawsuits.
“The SEC is intently centered on SPAC merger transactions, and we will go on to maintain wrongdoers in this place accountable,” David Peavler, regional director of the SEC’s Fort Value Regional Business office, stated in a information release.
As Reuters reports, the fee “has been ratcheting up scrutiny of SPACs … The SEC has issued trader warnings, implemented an enforcement sweep of banking institutions associated in the transactions and has stated it is wanting at regulatory improve.”
Ahead of its SPAC merger, Akazoo operated as Akazoo Restricted, a company structured less than the rules of the U.K. with its primary place of organization in Athens, Greece.
When Akazoo took its recent variety, it raised $14.two million from MMAC’s shareholders and a further $40.6 million from accredited buyers by way of a non-public investment in general public fairness (“PIPE”) supplying at the time of the merger.
Akazoo’s shares traded as high as $7.49 in advance of plunging to $one.16 following a brief-selling hedge fund launched a report in April 2020 that concluded it was a comprehensive fraud, with negligible subscribers and profits.
