Akazoo, a Greek agency purporting to be a audio streaming service, has agreed to pay back $38.8 million to settle allegations that it defrauded buyers the two prior to and soon after it went community as a result of a SPAC merger.
The U.S. Securities and Trade Commission mentioned Akazoo grossly misrepresented the nature and achievements of its streaming business enterprise when it elevated $fifty four.8 million as a result of its merger in 2019 with particular intent acquisition business Fashionable Media Acquisition Corp. (MMAC) and when its shares had been traded on the Nasdaq from September 2019 to May perhaps 2020.
Between other points, the SEC mentioned in a civil grievance, Akazoo claimed sixty four.five million euros in revenue in the initially 50 % of 2019 from functions in 25 countries when, in reality, it “generated at most negligible revenue, operated in only a several countries, and its only sizeable source of cash was the $fifty four.8 million it had elevated from buyers.”
The settlement of the costs announced on Tuesday will be satisfied by Akazoo’s disgorgement of $35 million to buyers and payment of settlements of many course motion lawsuits.
“The SEC is intently focused on SPAC merger transactions, and we will continue on to maintain wrongdoers in this area accountable,” David Peavler, regional director of the SEC’s Fort Truly worth Regional Business, mentioned in a news release.
As Reuters reviews, the commission “has been ratcheting up scrutiny of SPACs … The SEC has issued investor warnings, executed an enforcement sweep of banks involved in the transactions and has mentioned it is hunting at regulatory modify.”
Just before its SPAC merger, Akazoo operated as Akazoo Restricted, a business arranged below the laws of the U.K. with its key place of business enterprise in Athens, Greece.
When Akazoo took its latest form, it elevated $fourteen.two million from MMAC’s shareholders and an additional $40.6 million from accredited buyers as a result of a non-public financial commitment in community equity (“PIPE”) giving at the time of the merger.
Akazoo’s shares traded as significant as $7.49 prior to plunging to $1.16 soon after a quick-offering hedge fund introduced a report in April 2020 that concluded it was a complete rip-off, with negligible subscribers and revenue.