British billionaire Richard Branson is ordered to face lawsuit by shareholders who claim he hid problems with Virgin Galactic spaceship program – and sold hundreds of millions of dollars of stock at inflated prices

• Richard Branson, 71, has to face shareholder claims that he hid issues with the Virgin Galactic spaceship program 
• Shareholders also accuse him of selling hundreds of millions of dollars of stocks at inflated prices, which now trade more than 90 percent below Feb. 2021 peak
• They sued the billionaire for ‘deliberately sending faulty rockets to space’ after he claimed his Unity flight was ‘flawless’ despite straying from assigned airspace
• Shareholders claim his company is ‘less valuable than it appeared because its flights were not as safe as publicly represented’ 
• Branson founded Virgin Galactic in 2004, hoping to begin commercial space tourism by 2009
• His company estimates that it will begin commercial flights by spring 2023 

British billionaire Richard Branson has to face shareholder claims that he hid issues with Virgin Galactic spaceship program and reportedly sold millions of stock at inflated prices.  

A US judge ordered Branson, 71, face shareholders’ claims that he concealed problems in the Virgin Galactic Holdings Inc’s spaceship program on Monday after he was sued for ‘deliberately sending faulty rockets to space.’ 

While dismissing most claims in the proposed class action, US District Judge Allyne Ross in Brooklyn said shareholders could try to prove that Virgin and Branson defrauded them into overpaying for the space tourism company’s shares, which now trade more than 90 percent below their February 2021 peak.

Shareholders can sue over July 2019 statements that Virgin had made ‘great progress’ overcoming ‘hurdles’ to commercial spaceflight, despite a near-disastrous test flight five months earlier when its rocket plane Unity suffered critical damage.

Branson must also defend his July 2021 statement that his own just-completed flight on Unity, where he soared 50 miles above the earth, had been ‘flawless’ though Unity had strayed from its assigned airspace.

Branson’s company went public in October 2019, but court documents claim: ‘Virgin Galactic was less valuable than it appeared because its flights were not as safe as publicly represented.’

Richard Branson, 71, (pictured at NYSE in 2019) has to face shareholder claims that he hid issues with Virgin Galactic spaceship program and reportedly sold millions of stock at inflated prices

US District Judge Allyne Ross in Brooklyn said he had to face shareholders’ claims that he concealed problems in Virgin Galactic Holdings Inc’s spaceship program on Monday after he was sued for ‘deliberately sending faulty rockets to space’

The billionaire sold 16 million shares for about $398million while the stock was ‘artificially inflated’ between April 12 and August 12 last year, the suit alleges.

He has sold off more than $1billion of Virgin Galactic shares – around £760million – since early 2020.

In a 55-page decision, Ross said shareholders also could sue over approximately $301million of stock that Branson sold the month after the flight.

Lawyers for Virgin and Branson did not immediately respond to requests for comment.

In seeking a dismissal, they said there was no proof of intent to defraud, and that the defendants had thoroughly disclosed safety and design issues in developing commercial space travel, ‘unquestionably a high-risk proposition.’

Laurence Rosen, a lawyer for the shareholders, declined to comment.

Virgin is based in Tustin, California, and went public in October 2019 by merging with a special purpose acquisition vehicle, Social Capital.

The lawsuit covers shareholders who owned the stock of either from July 10, 2019, to October 14, 2021, when Virgin grounded Unity and delayed its commercial space travel service. Its shares fell 16.8 percent the next day, to $20.01.

Branson, 72, is worth $3.7billion, according to Forbes magazine.

In Monday afternoon trading, Virgin shares were up five cents at $4.97.

Branson founded Virgin Galactic in 2004, hoping to begin commercial space tourism by 2009. 

It aims to launch commercial space flights for paying customers in spring 2023. 

Branson must also defend his July 2021 statement that his own just-completed flight on Unity, where he soared 50 miles above the earth, had been ‘flawless’ though Unity had strayed from its assigned airspace

Shareholders can sue over July 2019 statements that Virgin had made ‘great progress’ overcoming ‘hurdles’ to commercial spaceflight, despite a near-disastrous test flight five months earlier when its rocket plane Unity suffered critical damage

The company is also investigating materials in spacecraft joints which tests revealed exhibited a ‘reduction in strength’, the suit claims.

Some 600 would-be passengers have paid deposits for flights on Branson’s spacecraft, priced at $450,000 per seat for a flight that lasts up to three hours, including a handful of weightless minutes in zero gravity.

Meanwhile, US billionaires in the space game – Jeff Bezos and Elon Musk – have sent up several tourism flights. 

Bezos’ Blue Origin have sent up six flights since 2021 and Musk’s SpaceX has launched two. 

Virgin Galactic is set to resume test flights in January after pausing it for more than year. The last test flight to go out was in July 2022 on the Unity flight. 

Since the hiatus, Branson’s company has been working on enhancement to the Unity spaceship and its mothership Eve, which flies part way into space with Unity. 

The upgrades are now completed on Unity and Eve will be finished by the end of the year, the Albuquerque Journal. 

‘As we approach our launch of commercial service in second-quarter 2023, we recognize what a significant milestone this will be for the team – one that advances our mission to become an astronaut-driven, consumer-facing spaceflight company,’ CEO Michael Colglazier said. 

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