Arqit (ARQQ) Case on Misleading

E.D. New York

Court

1:22-CV-2604

Case number

09/01/2021

Class period Start

04/14/2023

Class period End

06/14/2023

Lead Plaintiff motion deadline

Investors suspect that during the Merger, as a result of which the $ARQQ became public, and further Arqit's Leaders & Its Advisers misinformed the Investors about the real business prospects, which led to the losses of the latter.

On September 2, 2021, Centricus merged with Arqit, and Arqit (ARQQ) survived the Merger. The security holders of Centricus, with the exception of those who chose to redeem their Centricus ordinary shares, became security holders of Arqit. As part of the Merger consideration, each Centricus shareholder received one Arqit ordinary share and one Arqit warrant for each ordinary share and warrant they held in Centricus, respectively, immediately prior to the Merger.

The U.K. cybersecurity startup rocketed to a multibillion-dollar valuation when it listed publicly on the promise of making encryption technology that would protect the defense industry, corporations, and consumers alike from the prying eyes of next-generation computer systems. Founder and CEO David Williams told investors at the time that his company had an “impressive backlog” of revenue and was ready “for hyper-scale growth."

On April 18, 2022, The Wall Street Journal released an article stating that "Arqit has given investors an overly optimistic view of its future revenue and the readiness and workability of its signature encryption system, according to former employees and other people familiar with the company, and documents viewed by The Wall Street Journal." On this news, ARQQ lost 17.1% or $313 mn of capitalization.

Taking into account all the statements and facts, there are suspicions to believe that the Company has significantly misinformed and failed to disclose investors about the real prospects, specifically:
Arqit’s proposed encryption technology would require widespread adoption of new protocols and standards for telecommunications which had not yet been adopted; 
British cybersecurity officials questioned the viability of Arqit’s proposed encryption technology in a meeting in 2020; 
the British government was not an Arqit customer but, rather, providing grants to Arqit; 
Arqit had little more than an early-stage prototype of its encryption system at the time of the Merger; 
no commercial customer was using Arqit’s encryption system with live data; 
the bulk of the Company’s committed revenue wasn’t from selling its products; 
several clients the Company listed—including a number of British government agencies—were simply giving Arqit research grants, nonbinding memorandums of understanding or research agreements that come with no funding, not contracts for its encryption product, and 
As a result, the statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times.

Case Status

Motion to dismiss

Alleged Offence

Misleading Statements,

Financial Misrepresentation,

Failure to Disclose,

Insider Trading,

Negligence,

Omissions

Suspected Party

Directors,

Management,

Influencer

Security Type

Stocks

Trade Direction

Long

Shock Event Date

04/18/2022

Filing date

04/14/2023

Lead Plaintiff Deadline

06/14/2023

Arqit (ARQQ) Case on Misleading

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