David and Marta Hall, former executive officers and controlling stockholders of Velodyne Lidar, Inc. (NASDAQ:VLDR) ("Velodyne Lidar" or the “Company"), today announced that they have filed a lawsuit in the United States Superior Court of California against certain individuals for their roles in misleading stockholders of the original Velodyne Lidar (“Original Velodyne”) regarding its 2020 SPAC merger with Graf Industrial Corp. ("GIC").
Defendants named in the lawsuit include: Jeffrey Vetter (principal outside legal counsel for Original Velodyne), Keith Able (former director of GIC), Michael Dee (former director, president and Chief Financial Officer of GIC and current Chairman of the Company’s Board of Directors), Anand Gopalan (former Chief Executive Officer of Original Velodyne and the Company), James Graf (former director of the Company), Andrew Hamer (Chief Financial Officer of Original Velodyne and the Company), Julie Levenson (former director of GIC), Sabrina McKee (former director of GIC), Kevin Starke (former director of GIC), Michael Vella (former general counsel for Original Velodyne and the Company) and certain unnamed individuals (collectively, the "Defendants").
The suit – a copy of which can be accessed here – accuses the Defendants of conspiracy to defraud, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, intentional misrepresentation, negligent misrepresentation and securities fraud.
In the suit, the Halls assert that the Defendants each, and collectively, carried out a number of unlawful activities, including:
- Messrs. Graf and Dee continually misled stockholders, investors and potential investors about Original Velodyne’s forecasted financial performance prior to the 2020 SPAC merger with GIC. In communications to investors, Messrs. Graf and Dee published false and misleading statements, including overstating revenue projections for 2021 and beyond, and purporting that Ford Motor Company would continue to hold a large equity stake in the Company without consulting or notifying the Halls about such statements.
- Messrs. Graf and Dee also purposefully misrepresented Mr. Hall's future involvement in the Company to Original Velodyne stockholders, including the Halls. Messrs. Graf and Dee continually highlighted the importance of Mr. Hall's continued role as executive chairman in public communications yet conspired to eliminate his influence over the Company's operations and push him out of management almost immediately following the merger. Under the current leadership team, Velodyne Lidar has failed to develop LIDAR technology, lost substantial market share, bled significant cash and lacked a credible strategy.
- Messrs. Graf, Dee, Gopalan and Hamer misled stockholders about Mr. Hall's departure from the Company. In February 2021, the Company disclosed that Mr. Hall had been terminated from his position of chairman and that Ms. Hall had been terminated as an employee of the Company following a previously undisclosed investigation. Messrs. Graf, Dee, Gopalan and Hamer previously failed to disclose the investigation when they pre-announced the Company's preliminary fourth quarter and full year 2020 financial results on January 7, 2021, and instead falsely represented that there was "no change in [the Company's] fundamental outlook for the future,” despite virtually all of the Company’s previous U.S. Securities and Exchange Commission filings having informed and warned investors that the loss of Mr. Hall would adversely affect Velodyne Lidar’s business. As predicted, stockholders have lost 80% of value since the Company ousted Mr. Hall as chairman.1
- Prior to the merger, Jeffrey Vetter, Original Velodyne’s principal outside legal counsel, breached his legal and fiduciary duties by neglecting to act in the best interests of his client and its stockholders. Instead, Mr. Vetter structured post-merger corporate documents to hand over control of the post-merger entity to the GIC-appointed directors – which included Messrs. Graf and Dee – and deprive Original Velodyne stockholders, including the Halls, of their rights. Notably, the Company's post-merger corporate documents limit stockholders' ability to nominate directors or introduce business at a stockholder meeting, eliminate stockholders' right to act by written consent and provide for a classified board of directors, among other items.
1 Velodyne Lidar total stockholder returns from February 19, 2021 (the date Mr. Hall was terminated from his chairman position) to market close on Friday, January 14, 2022.