UNITED STATES OF AMERICA
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UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
ADMINISTRATIVE PROCEEDING
File No. 3-20393
In the Matter of
Momentus, Inc., Stable Road
Acquisition Corp., SRC-NI
Holdings, LLC, and Brian Kabot,
Respondents.
I.
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PROPOSED PLAN OF
DISTRIBUTION
OVERVIEW
1.
The Division of Enforcement submits this Proposed Plan of Distribution (the
“Plan”) to the United States Securities and Exchange Commission (the “Commission”) pursuant
to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans (the
“Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair
Fund (the “Fair Fund”), comprised of civil money penalties paid by Momentus, Inc.
(“Momentus”), Stable Road Acquisition Corp. (“SRAC”), SRC-NI Holdings, LLC (“SRC-NI”),
and Brian Kabot (“Kabot”) (collectively, the “Respondents”) in the above-captioned matter. 1
2.
As described more specifically below, the Plan seeks to compensate investors
who were harmed by the Respondents’ conduct described in the Order, involving false and
misleading statements and omissions made in connection with the offer and sale of SRAC
common stock, SRAC warrants, and SRAC units (SRACU, consisting of one share of common
stock and one-half of one warrant) registered with the Commission and traded on the Nasdaq
exchange until August 12, 2021 (the “Securities”). As calculated using the methodology detailed
in the Plan of Allocation (attached as Exhibit A), investors will be compensated for their losses
on the Securities that were purchased or acquired between October 7, 2020 and July 14, 2021
(the “Relevant Period”). In the view of the Commission staff and the Fund Administrator, this
methodology constitutes a fair and reasonable allocation of the Fair Fund.
3.
The Commission has custody of the Fair Fund and shall retain control of the
assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission
retains jurisdiction over its implementation.
See Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and
Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order,
Securities Act Rel. No. 10955 (July 13, 2021) (the “Order”).
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II.
BACKGROUND
4.
On July 13, 2021, the Commission issued the Order instituting and
simultaneously settling cease-and-desist proceedings against the Respondents. In the Order, the
Commission found that Momentus, a privately held space company that aspires to provide space
infrastructure services, and its former Chief Executive Officer Mikhail Kokorich (“Kokorich”),
made materially false statements, omitted to state material facts, and engaged in other deceptive
conduct as Momentus sought to go public through a business combination with SRAC, a
publicly traded special-purpose acquisition company (“SPAC”). Specifically, the Commission
found that Momentus’ business plans and multi-billion dollar revenue projections, as provided to
investors and described in SRAC’s Form S-4 registration statement/proxy statement filed in
connection with the anticipated merger, were materially false and misleading.
5.
According to the Order, on October 7, 2020, Momentus and SRAC announced
their merger agreement and made presentations to private and institutional investors, as well as,
analysts that contained materially false statements concerning the success of Momentous’
technology. On the same day, SRAC entered into subscription agreements with private
investment in public equity (“PIPE”) investors who agreed to invest $175 million of capital by
purchasing 17.5 million shares of common stock of the company, if and after the merger was
approved. The Commission also found that SRAC included Momentous’ material misstatements
and false financial projections in its registration statement filed with the Commission in
November 2020 and in amendments filed on December 14, 2020 and March 8, 2021 which
Kabot signed. Further, the Commission found that Momentous and SRAC did not disclose that,
among other things, there was no assurance that it Momentous’ technology was “sufficiently
reliable and efficient to permit commercialization…” until June 29, 2021 when it filed the third
amendment to its registration statement.
6.
According to the Order, Momentous, Kokorich, and SRAC also concealed and
made false statements about U.S. government concerns with national security and foreign
ownership risks posed by Kokorich, including concerns regarding his affiliation with Momentous
which jeopardized, among other things, the Momentous’ launch schedule and revenue
projections that were based in part on assumptions about the timing of its first commercial
launch. The Commission found that in January 2021 Momentus and SRAC became aware of
correspondence from the U.S. Defense Department stating that Momentus posed a risk to
national security as a result of its association with Kokorich. Kokorich, a foreign national could
not access parts of Momentus’ technology without an export license, which was denied because
of national security reasons with respect to Kokorich. To address this issue, Kokorich formally
stepped down as CEO of Momentus on January 25, 2021 and on March 31, 2021, placed his
shares of Momentus stock in a voting trust. 2 According to the Order, in its June 29, 2021
amendment to its registration statement, SRAC disclosed that Momentous was forced to reduce
its financial projections due to adverse licensing decisions stemming from Kokorich’s national
security risks, and contributed to a 50% decline in Momentous’ enterprise valuation, from $1.1
billion to less than $600 million.
Upon announcing Kokorich’s resignation as CEO, SRAC common stock price declined significantly. SRAC’s
stock price also declined significantly on July 14, 2021, the day after the Commission issued the Order.
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7.
In addition, the Commission found that Brian Kabot, SRAC’s CEO who signed
public filings that included misrepresentations about Momentus’ technology and national
security risks, caused SRAC’s disclosure violations. According to the Order, SRAC’s public
filings, including registration statements signed by Kabot, incorporated Momentus’ and
Kokorich’s false and misleading claims caused investors to be misled about material aspects of
Momentus’ business. The Commission further found that Kabot, was a managing member of
SRAC’s sponsor, SRC-NI, and as such his conduct as described in the Order, was attributable to
SRC-NI.
8.
The Commission ordered the Respondents to pay $8,040,000.00 in civil money
penalties to the Commission. The Commission also created a Fair Fund, pursuant to Section
308(a) of the Sarbanes-Oxley Act of 2002, so the penalties paid can be distributed to harmed
investors (the “Fair Fund”).
9.
The Respondents have paid in full. The Fair Fund has been deposited in a
Commission-designated account at the United States Department of the, and any accrued interest
will be added to the Fair Fund.
III.
DEFINITIONS
As used in this Plan, the following definitions will apply:
10.
“Administrative Costs” shall mean any administrative costs and expenses,
including without limitation the fees and expenses of the Tax Administrator and the Fund
Administrator, tax obligations, bond premium expenses, and investment and banking costs.
11.
“Claim Form” means the form designed by the Fund Administrator, in
consultation with the Commission staff, for the filing of claims in accordance with this Plan.
The claim form will require, at a minimum, sufficient documentation reflecting any Preliminary
Claimant’s purchases and dispositions of the Securities during the Relevant Period such that
eligibility under the Plan can be determined, tax identification and other related information from
the Preliminary Claimant as determined necessary by the Fund Administrator in coordination
with the Tax Administrator, and a certification that the Preliminary Claimant is not an Excluded
Party.
12.
“Claim Status Notice” means the notice sent by the Fund Administrator within
ninety (90) days of the Claims Bar Date to any Preliminary Claimant that submitted a deficient
Claim Form. The Claim Status Notice will provide to each Preliminary Claimant whose claim is
deficient, in whole or in part, the reason(s) for the deficiency and in the event the claim is denied,
the Claim Status Notice will state the reason(s) for such denial. The Claim Status Notice will
also notify the Preliminary Claimant of the opportunity to cure any deficiency, request
reconsideration, or dispute the determination made by the Fund Administrator and provide
instructions regarding what is required to do so.
13.
“Claims Bar Date” means the date established in accordance with this Plan by
which a Preliminary Claimant’s Claim Form must be postmarked or submitted electronically in
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order to receive consideration under the Plan. The Claims Bar Date shall be ninety (90) days
after the initial mailing of the Claims Packet. Claim Forms submitted by Preliminary Claimants
postmarked or received after the Claims Bar Date will not be accepted unless the Fund
Administrator is directed to do so by the Commission staff.
14.
“Claims Packet” means the materials relevant to submitting a claim that will be
provided to Preliminary Claimants who request such materials through a website or otherwise
prior to the Claims Bar Date. The Claims Packet will include, at a minimum, a copy of the Plan
Notice and a Claim Form (together with instructions for completion of the Claim Form).
15.
“Determination Notice” means the written notice sent by the Fund Administrator
to all Preliminary Claimants who timely submitted a Claim Form notifying the Preliminary
Claimant of its eligibility determination. The Determination Notice will further provide to each
Preliminary Claimant that they are determined to be an Eligible Claimant with his, her, or its
calculated Recognized Loss. This Determination Notice will constitute the Fund Administrator’s
final notice regarding the eligibility status of the claim.
16.
“Distribution Payment” means a payment from the Fair Fund to a Payee in
accordance with the terms of this Plan.
17.
“Eligible Claimant” means a Preliminary Claimant, who is not an Excluded
Party, who submitted a valid Claim Form and has suffered a Recognized Loss, as calculated in
accordance with the Plan of Allocation.
18.
“Excluded Party” shall mean:
(a)
The Respondents;
(b)
Present or former officers or directors of Respondents or any assigns,
creditors, heirs, distributees, spouses, parents, dependent children or
controlled entities of any of the foregoing Persons or entities;
(c)
Any employee or former employee of the Respondents or any of its
affiliates who has been terminated for cause or has otherwise resigned, in
connection with the conduct described in the Order;
(d)
Any Person who, as of the Claims Bar Date, has been the subject of
criminal charges related to the conduct described in the Order or any
related Commission action;
(e)
Any firm, trust, corporation, officer, or other entity in which Respondents
has or had a controlling interest;
(f)
The Fund Administrator, its employees, and those Persons assisting the
Fund Administrator in its role as the Fund Administrator; or
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(g)
Any purchaser or assignee of another Person’s right to obtain a recovery
from the Fair Fund for value; provided, however, that this provision shall
not be construed to exclude those Persons who obtained such a right by
gift, inheritance or devise.
The Claim Form will require claimants to certify that they are not an Excluded Party. All
Excluded Parties will be deemed ineligible to participate in the distribution of the Fair Fund.
19.
“Fair Fund” means the fund created by the Commission pursuant to Section
308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors harmed by Respondents’
violations described in the Order.
20.
“Net Available Fair Fund” means the Fair Fund, plus any interest or earnings,
less Administrative Costs.
21.
“Payee” means an Eligible Claimant whose Recognized Loss calculates, in
accordance with the Plan of Allocation, to a distribution amount is equal to or greater than
$10.00 who will receive a Distribution Payment.
22.
“Person” means natural individuals as well as legal entities such as corporations,
partnerships, or limited liability companies.
23.
“Plan Notice” means a written notice from the Fund Administrator to Preliminary
Claimants informing them of the Fair Fund; the Plan and its eligibility requirements; explaining
how to submit a claim, including instructions for any online claims process; and how to obtain a
copy of the approved Plan and Claim Form by request or from the Fair Fund’s website. The Plan
Notice will also be available on the Fair Fund’s website that is maintained by the Fund
Administrator.
24.
“Plan of Allocation” means the methodology used by the Fund Administrator to
calculate if a Preliminary Claimant has suffered a Recognized Loss. The Plan of Allocation is
attached as Exhibit A.
25.
“Preliminary Claimant” shall mean a Person, or their lawful successors,
identified by the Fund Administrator as having possible claim to recover from the Fair Fund
under this Plan, or a Person asserting prior to the Claims Bar Date that he, she, or it has a
possible claim to recover from the Fair Fund under this Plan, as a result of transactions in the
Securities during the Relevant Period.
26.
“Recognized Loss” means the amount of loss calculated in accordance with the
Plan of Allocation.
27.
“Relevant Period” means the period of time from October 7, 2020 through
July 13, 2021.
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28.
“Securities” refers to SRAC common stock (“SRAC”), SRAC warrants
(“SRACW”) and SRAC units (“SRACU”), consisting of one share of common stock and onehalf of one warrant) registered with the Commission and traded on the NASDAQ exchange until
August 12, 2021.
29.
“Summary Notice” means the notice published in print or internet media that
shall include, at a minimum, a statement of the purpose of the Fair Fund and the Plan, the means
of obtaining a Claims Packet, and the Claims Bar Date. The Summary Notice will be published
three (3) times and the first will appear within ten (10) days of the initial mailing of the Claims
Packets.
30.
“Third-Party Filer” means a third party, including without limitation a nominee,
custodian, or an intermediary holding in street name, who is authorized to submit and submits a
claim(s) on behalf of one or more Preliminary Claimants. Third-Party Filer does not include
assignees or purchasers of claims, which are excluded from receiving Distribution Payments.
IV.
TAX COMPLIANCE
31.
On January 23, 2023, the Commission appointed Heffler, Radetich & Saitta, LLP
as the tax administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations
of the Fair Fund. 3 The Tax Administrator will be compensated for reasonable fees and expenses
from the Fair Fund in accordance with its 2022-2024 Engagement Letter Agreement with the
Commission.4
32.
The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section
468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related
regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the
administrator of such QSF, for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the
tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not
limited to:
(a)
Obtaining a taxpayer identification number;
(b)
Requesting funds necessary for the timely payment of all applicable taxes,
the payment of taxes for which the Tax Administrator has received funds,
and the filing of applicable returns; and
(c)
Fulfilling any information reporting or withholding requirements required
for distributions from the Fair Fund.
33.
All tax obligations will be paid from the Fair Fund, subject to the review and
approval of Commission staff.
See Order Appointing Tax Administrator, Exchange Rel. No. 96733 (Jan. 23, 2023).
See Omnibus Order Directing the Engagement of Two Tax Administrator for Appointment on a Case-By-Case
Basis in Administrative Proceedings that Establish Distribution Funds, Exchange Act Rel. No. 94845 (May 4, 2022).
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V.
FUND ADMINISTRATOR
34.
On February 24, 2023, the Commission appointed Epiq Class Action & Claims
Solution, Inc. (“Epiq”), as the fund administrator for the Fair Fund (the “Fund Administrator”),
and the Fund Administrator has obtained a bond in the amount of $8,040,000, as ordered. 5
Pursuant to Rule 1105(a) of the Commission’s Rules, 17 C.F.R. § 201.1105(a), the Fund
Administrator may be removed at any time by order of the Commission or hearing officer.
35.
The Fund Administrator will be responsible for administering the Fair Fund in
accordance with the Plan. This will include, among other things, taking reasonable steps to
identify and contact Preliminary Claimants; obtaining mailing information for Preliminary
Claimants; establishing a website and staffing a call center to address inquiries during the claims
process; developing a claims database; preparing accountings; cooperating with the Tax
Administrator to satisfy any tax liabilities and to ensure compliance with income tax reporting
requirements, including but not limited to Foreign Account Tax Compliance Act (FATCA);
advising Preliminary Claimants of deficiencies in claims and providing an opportunity to cure
any documentary defects; taking antifraud measures, such as identifying false, ineligible and
overstated claims; making determinations under the criteria established herein as to Preliminary
Claimant eligibility; advising Preliminary Claimants of final claim determinations; disbursing the
Fair Fund in accordance with this Plan, as ordered by the Commission; and researching and
reconciling errors and reissuing payments, when possible.
36.
To carry out the purposes of this Plan, the Fund Administrator is authorized to
make and implement immaterial changes to the Plan upon agreement of the Commission staff. If
a change is deemed to be material by the Commission staff, Commission approval is required
prior to implementation by amending the Plan.
37.
The Fund Administrator may extend any procedural deadline contained in the
Plan for good cause shown, if agreed upon by the Commission staff.
38.
The Fund Administrator is authorized to enter into agreements with third parties
as may be appropriate or necessary in the administration of the Fair Fund, provided such third
parties are not excluded pursuant to other provisions of this Plan. In connection with such
agreements, the third parties shall be deemed to be agents of the Fund Administrator under this
Plan.
39.
The Fund Administrator will be entitled to payment from the Fair Fund of
reasonable fees and expenses, including the bond premium, incurred in the performance of its
duties (including any such fees and expenses incurred by agents, consultants or third parties
retained by the Fund Administrator in furtherance of its duties).
See Order Appointing Fund Administrator and Setting Bond Amount, Exchange Act Rel. No. 96981 (Feb. 24,
2023).
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VI.
ADMINISTRATION OF THE FAIR FUND
Identification of and Notification to Preliminary Claimants
40.
The Fund Administrator will, insofar as practicable, use its best efforts to
identify Preliminary Claimants from a review of trading records, obtaining records from
registered broker-dealers and investment advisors, and seeking information from any other
source available to it. The Fund Administrator may also engage a third party firm, after
consultation with and approval of the Commission staff, to assist in identifying Preliminary
Claimants to maximize the participation rate of investors in the Fair Fund.
41.
Within thirty (30) days after Commission approval of the Plan, the Fund
Administrator shall:
(a)
design and submit a Claims Packet, including the Plan Notice and the
Claim Form, to the Commission staff for review and approval;
(b)
create a mailing and claim database of all Preliminary Claimants based
upon information identified by the Fund Administrator;
(c)
run a National Change of Address search to retrieve updated addresses for
all records in the database, thereby ensuring the mailing information for
Preliminary Claimants is up-to-date;
(d)
email and/or mail a Claims Packet to each Preliminary Claimant identified
by the Fund Administrator and to the Fund Administrator’s list of banks,
brokers, and other nominees in accordance with paragraph 46 below;
(e)
establish and maintain a website dedicated solely to the Fair Fund. The
Fair Fund’s website, located at www.MomentusStableRoadFairFund.com
will make available a copy of the approved Plan; provide information
regarding the claims process and eligibility requirements for participation
in the Fair Fund in the form of frequently asked questions; include in
downloadable form, the Plan Notice and Claim Form and other related
materials; and such other information the Fund Administrator believes will
be beneficial to Preliminary Claimants;
(f)
establish and maintain a toll-free telephone number, 888-817-6536 for
Preliminary Claimants to call to speak to a live representative of the Fund
Administrator during its regular business hours or, outside of such hours,
to hear prerecorded information about the Fair Fund. The toll-free number
will be listed on all correspondence from the Fund Administrator to
Preliminary Claimants as well as on the Fair Fund’s website; and
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(g)
establish and maintain a traditional mailing address and an email address
which will be listed on all correspondence from the Fund Administrator to
Preliminary Claimants as well as on the Fair Fund’s website.
42.
The Fund Administrator will publish the Summary Notice on the internet and/or
in print media acceptable to Commission staff three (3) times and will appear within ten (10)
days of the initial mailing of the Claims Packet.
43.
The Commission staff retains the right to review and approve any material posted
on the Fair Fund’s website, any material mailed, and any scripts used in connection with any
communication with Preliminary Claimants.
44.
In all materials that refer to the Claims Bar Date, the filing deadline will be
clearly identified with the calendar date, which is ninety (90) days from the date of the initial
mailing of the Claims Packet.
45.
The Fund Administrator will promptly provide a Claims Packet to any
Preliminary Claimant upon request made via mail, phone, or email prior to the Claims Bar Date.
46.
The Fund Administrator will send by mail, email, or other means, the Claims
Packet to the Fund Administrator’s list of banks, brokers, and other nominees, as well as any
other institutions identified during the outreach process, that may have records of the Securities
during the Relevant Period (collectively, the “Nominees or Custodians”). The Fund
Administrator will request that these entities, to the extent that they were record holders for
beneficial owners of the Securities:
(a)
within fourteen (14) days of the Nominees’ or Custodians’ receipt of the
Claims Packet, notify and send the Claims Packet to the respective
beneficial owners, so that the beneficial owners may timely file a claim.
The burden will be on the Nominees or Custodians to ensure the claims
process information, including the Claims Form and other relevant
materials, is properly disseminated to the beneficial owners; and/or
(b)
provide to the Fund Administrator, within fourteen (14) days of receipt of
the Claims Packet, a list of last known names and addresses for all
beneficial owners for whom/which they purchased or acquired and sold or
redeemed, as the record holder, the Securities during the Relevant Period,
so that the Fund Administrator can communicate with the beneficial
owners directly.
47.
At the discretion of the Fund Administrator, in consultation with the Commission
staff, a reasonable number of additional copies of the Claims Packet shall be made available to
any Nominee or Custodian requesting it for the purpose of distribution to beneficial owners.
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48.
Requests to the Fund Administrator for additional copies of the Claims Packet in
excess of five hundred (500) are subject to approval by the Fund Administrator, in consultation
with the Commission staff.
49.
Documented reasonable out-of-pocket expenses incurred by the Nominees or the
Custodians, which would not have been incurred but for compliance with paragraph 46 above,
shall be reimbursed from the Fair Fund. The amount of such expenses allowed will be at the
discretion of the Fund Administrator, in consultation with the Commission staff. Unless
otherwise determined by the Fund Administrator in consultation with the Commission staff, outof-pocket expenses based on the following rates will be considered reasonable:
(a)
a maximum of $0.08 per Claims Packet, plus postage at the pre-sort
postage rate per Claims Packet actually mailed;
(b)
a maximum of $0.05 per email of Summary Notice or Claims Packet link
disseminated; or
(c)
$0.20 per name, address, and email address provided to the Fund
Administrator, up to a maximum of amount of $1,500.00.
50.
The Fund Administrator will attempt to locate any Preliminary Claimant whose
mailing is returned as “undeliverable” and will document all such efforts. The Fund
Administrator shall use its best efforts to make use of commercially available resources and other
reasonably appropriate means to obtain updated addresses in response to “undeliverable” notices,
and forward any returned mail for which an updated address is provided or obtained. The Fund
Administrator will make available, upon request by the Commission staff, a list of all
Preliminary Claimants whose Claims Packet has been returned as “undeliverable” due to
incorrect addresses and for which the Fund Administrator has been unable to locate current
addresses.
Filing a Claim
51.
To avoid being barred from asserting a claim, on or before the Claims Bar Date,
each Preliminary Claimant must submit to the Fund Administrator a properly completed Claim
Form reflecting such Preliminary Claimant’s claim, together with all required supporting
documentation as the Fund Administrator, in its discretion, deems necessary or appropriate to
substantiate the claim. Without limitation, this information may include third party documentary
evidence of purchases and dispositions of Securities during the Relevant Period, as well as
holdings of Securities at pertinent dates.
52.
Electronic claims submission is encouraged; the Plan Notice will include
instructions on how Preliminary Claimants can submit their claims electronically via the Fair
Fund’s website. If using the web-based claim filing option, a Preliminary Claimant must submit
his, her, or its claim to the Fund Administrator by 11:59 p.m. EST on the Claims Bar Date. The
Plan Notice will also include instructions for submission of claims if the Preliminary Claimant is
unable to submit his, her, or its claim electronically.
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53.
The burden will be upon the Preliminary Claimant to ensure that his, her or its
Claim Form has been properly and timely received by the Fund Administrator. A Claim Form
that is postmarked or otherwise received after the Claims Bar Date will not be accepted unless
the deadline is extended by the Fund Administrator for good cause shown, after consultation
with the Commission staff.
54.
All Claim Forms and supporting documentation necessary to determine a
Preliminary Claimant’s eligibility to receive a distribution from the Fair Fund under the terms of
the Plan must be verified by a declaration executed by the Preliminary Claimant under penalty of
perjury under the laws of the United States. The declaration must be executed by the
Preliminary Claimant, unless the Fund Administrator accepts such declaration from a Person
authorized to act on the Preliminary Claimant’s behalf, whose authority is supported by such
documentary evidence as the Fund Administrator deems necessary.
55.
When submitting claims to the Fair Fund on behalf of its clients, all Third-Party
Filers must use the electronic filing template provided by the Fund Administrator in this matter.
Third-Party Filers that do not comply with the template and format provided by the Fund
Administrator may be rejected. Third-Party Filers must also submit a signed master proof of
claim and release, as well as proof of authority to file on behalf of the claimant(s) at the time the
electronic file of transactions is submitted. Failure to do so may result in rejection of the claim.
56.
Each Third-Party Filer must establish the validity and amount of each claim in its
submission. Third-Party Filers must submit such supporting documentary evidence of
purchases, dispositions, and holdings of Securities as the Fund Administrator deems necessary or
appropriate to substantiate each individual claim. Without limitation, this includes the complete
name of the Preliminary Claimant (beneficial account owner) and its TIN (for individuals) or
EIN (for companies), sufficient contact information to confirm the identity of the beneficial
owner, and documentation from the original bank, broker or other institution of purchases and
dispositions of Securities (account statements, confirmations and other documentation of
purchases and dispositions), as well as holdings of the Securities on pertinent dates.
Documentation generated by the Third-Party Filer as well as affidavits in lieu of supporting
documentation will not be accepted unless, for good cause, the Fund Administrator determines it
acceptable. The Fund Administrator will have the right to request, and the Third-Party Filer will
have the burden of providing to the Fund Administrator, any additional information and/or
documentation deemed necessary by the Fund Administrator to substantiate the claim(s)
contained in the submission. Documentation from a Third-Party Filer that is not acceptable to
the Fund Administrator will result in rejection of the affected claim(s). The determination of the
Fund Administrator to reject a claim for insufficient documentation, as reflected on the
Determination Notice, is final and within the discretion of the Fund Administrator.
57.
The receipt of Securities by gift, inheritance, devise, or operation of law will not
be deemed to be a purchase of Securities, nor will it be deemed an assignment of any claim
relating to the purchase of such Securities unless specifically so provided in the instrument of
inheritance. The recipient of Securities as a gift, inheritance, devise or by operation of law will
be eligible to file a Claim Form and participate in the distribution of the Fair Fund to the extent
11
the original purchaser would have been eligible under the terms of the Plan. Only one claim may
be submitted with regard to the same transactions in Securities, and in cases where duplicative
claims are filed by the donor and donee, the donee claim will be honored, assuming it is
supported by proper documentation.
58.
Claims on behalf of a retirement plan covered by Section 3(3) of ERISA, 29
U.S.C.§ 1002(3), which do not include Individual Retirement Accounts and such plan’s
participants, are properly made by the administrator, custodian or fiduciary of the plan and not
by the plan’s participants. The Fund Administrator will distribute any payments on such claims
directly to the administrator, custodian or fiduciary of the retirement plan. The custodian or
fiduciary of the retirement plan will distribute any payments received in a manner consistent with
its fiduciary duties and the governing account or plan provisions.
59.
The Preliminary Claimant has the burden of notifying the Fund Administrator of a
change in his, her or its current address and other contact information, and of ensuring that such
information is properly reflected on the Fund Administrator's records.
Review of Claims and Deficiency Process
60.
The Fund Administrator will review all claim submissions and determine the
eligibility of each Preliminary Claimant to participate in the Fair Fund by reviewing claim data
and supporting documentation (or the lack thereof) and verifying the claim. Each Preliminary
Claimant will have the burden of proof to establish the validity and amount of his, her or its
claim. The Fund Administrator will have the right to request, and the Preliminary Claimant will
have the burden of providing to the Fund Administrator, any additional information and/or
documentation deemed relevant by the Fund Administrator.
61.
The Fund Administrator will provide a Claim Status Notice within ninety (90)
days of the Claims Bar Date to each Preliminary Claimant who has filed a deficient Claim Form
with the Fund Administrator. The Claim Status Notice will provide to each Preliminary
Claimant whose claim is deficient, in whole or in part, the reason(s) for the deficiency (e.g.,
failure to provide required information or documentation). In the event the claim is denied, in
whole or in part, the Claim Status Notice will state the reason(s) for such denial. The Claim
Status Notice will also notify the Preliminary Claimant of the opportunity to cure any deficiency,
request reconsideration, or dispute the determination made by the Fund Administrator and
provide instructions regarding what is required to do so.
62.
Any Preliminary Claimant with a deficient claim will have thirty (30) days from
the date of the Claim Status Notice to cure any deficiencies identified in the Claim Status Notice.
63.
Any Preliminary Claimant seeking reconsideration of a denied claim must advise
the Fund Administrator in writing within thirty (30) days of the date of the Claim Status Notice.
All requests for reconsideration must include the necessary documentation to substantiate the
basis upon which the Preliminary Claimant is requesting reconsideration of his, her, or its claim.
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64.
The Fund Administrator will have the authority, in its sole discretion, to waive
technical claim deficiencies and approve claims on a case-by-case basis, or in groups of claims.
Claims Eligibility Determination
65.
Within ninety (90) days of sending the Claims Status Notices, the Fund
Administrator will complete all claims determinations and send a written notice to all
Preliminary Claimants who timely submitted a Claim Form notifying the Preliminary Claimant
of its eligibility determination. The Determination Notice will further provide to each
Preliminary Claimant that they are determined to be an Eligible Claimant with his, her, or its
calculated Recognized Loss. The Determination Notice will constitute the Fund Administrator’s
final ruling regarding the eligibility status of the claim.
66.
The Fund Administrator may consider disputes of an Eligible Claimant’s
Recognized Loss calculation, if presented in writing to the Fund Administrator within thirty (30)
days of the date of the Determination Notice. The Fund Administrator will consult with
Commission staff as appropriate. The Fund Administrator will notify the Eligible Claimant in
writing within thirty (30) days of receiving a dispute of its determination, which will constitute
the Fund Administrator’s final ruling regarding the loss calculations for the claim.
Distribution Methodology
67.
Any Preliminary Claimant, who is not an Excluded Party, who submitted a valid
Claim Form and has suffered a Recognized Loss, as calculated in accordance with the Plan of
Allocation, will be deemed an Eligible Claimant.
68.
No Distribution Payments will be made for less than $10.00. If an Eligible
Claimant’s Recognized Loss, in accordance with the Plan of Allocation, calculates to a
distribution amount less than $10.00, that Eligible Claimant will be deemed ineligible to receive
a Distribution Payment and his, her, or its distribution amount will be reallocated on a pro-rata
basis to Eligible Claimants whose distribution amounts are greater than or equal to $10.00. All
Eligible Claimants whose Recognized Loss calculates to a distribution amount equal to or greater
than $10.00 will be deemed a Payee and receive a Distribution Payment.
Establishment of a Reserve
69.
Before determining the amount of funds available for distribution and calculating
each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax
Administrator, will establish a reserve to pay Administrative Costs and to accommodate any
unexpected expenditures (the “Reserve”).
70.
After all disbursements and Administrative Costs are paid, any remaining
amounts in the Reserve will become part of the Residual described in paragraph 87 below.
13
Preparation of the Payment File
71.
Within ninety (90) days following the date of the Determination Notices
described above, paragraph 65 above, the Fund Administrator will compile and send to the
Commission staff the Payee information, including the name, address, calculated Recognized
Loss, and the amount of the Distribution Payment for all Payees (the “Payee List”). The Fund
Administrator will also provide a Reasonable Assurances Letter to the Commission staff,
representing that the Payee List: (a) was compiled in accordance with the approved Plan; (b) is
accurate as to Payees’ names, addresses, Recognized Losses and amounts of their Distribution
Payment; (c) includes the number of Payees compensated; (d) the percentage of the Payee’s
Recognized Loss being compensated by the disbursement from the Fair Fund, and if applicable,
the total percentage to include all prior disbursements; (e) the total amount of funds to be
disbursed; and (f) provides all information necessary to make a payment to each Payee.
The Escrow Account
72.
Prior to the disbursement of funds from the Net Available Fair Fund, the Fund
Administrator will establish an escrow account (the “Escrow Account”) with a United States
commercial bank that is a well-capitalized financial institution as defined by the Federal Reserve
Act, Subpart D, 12 C.F.R. 208.43 and that is not unacceptable to the Commission staff (the
“Bank”), pursuant to an escrow agreement (the “Escrow Agreement”) to be provided by
Commission staff.
73.
The Fund Administrator, pursuant to the Escrow Agreement, shall also establish
with the Bank a separate deposit account (e.g. controlled distribution account, managed
distribution account, linked checking and investment account) (the “Distribution Account”),
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the guaranteed FDIC pass
through limit. The Distribution Account shall be linked with the Escrow Account and shall be
named, and records maintained, in accordance with the Escrow Agreement.
74. During the term of the Escrow Agreement, the portions of the Fair Fund transferred
to the Escrow Account (the “Escrow Property”), shall be invested and reinvested in short-term
U.S. Treasury securities backed by the full faith and credit of the United States Government or
an agency thereof. The investment shall be, of a type and term necessary to meet the cash
liquidity requirements for payments to Payees, tax obligations, and/or fees of the Tax
Administrator and/or Fund Administrator, including investment or reinvestment in a bank
account insured by the FDIC up to the guaranteed FDIC limit, or in money market mutual funds
registered under the Investment Company Act of 1940 that invest 100% of their assets in direct
obligations of the United States Government.
75. The Fund Administrator shall provide duplicate original bank and/or investment
statements on any accounts established by the Fund Administrator to the Tax Administrator on a
monthly basis and shall assist the Tax Administrator in obtaining mid-cycle statements, as
necessary.
14
76. The Fund Administrator shall deposit or invest funds in the Escrow and
Distribution Accounts so as to result in the maximum reasonable net return, taking into account
the safety of such deposits or investments. In consultation with Commission staff, the Fund
Administrator shall work with the Bank on an ongoing basis to determine an allocation of funds
between the Escrow and Distribution Account.
77. All interest, dividends, and/or income earned by the Escrow Property will accrue
for the benefit of the Escrow Property. All Administrative Costs associated with the Escrow and
Distribution Accounts will be the responsibility of the Fund Administrator, who may be
reimbursed for said costs as provided in this Plan. No such Administrative Costs may be paid to
the Bank, its agents, and/or its affiliates from the Escrow Property.
Distribution of the Fair Fund
78.
The Fund Administrator will seek to distribute the Net Available Fair Fund to all
Payees only after all Claim Forms have been processed and all Preliminary Claimants whose
claims have been rejected or disallowed, in whole or in part, have been notified and provided the
opportunity to contest or cure pursuant to the procedures set forth herein.
79. Upon the Commission’s staff’s receipt, review, and acceptance of the Payee List
and Reasonable Assurances Letter from the Fund Administrator, the Commission staff will seek
an Order from the Commission pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17
C.F.R. § 210.1101(b)(6), to disburse funds from the Net Available Fair Fund to the Bank in
accordance with the Payee List for distribution by the Fund Administrator in accordance with the
Plan. All disbursements will be made pursuant to a Commission Order.
80. Upon issuance of an Order to disburse, the Commission staff will direct the transfer
of funds in accordance with the Payee List to the Bank. The Fund Administrator will then use its
best efforts to commence mailing Distribution Payment checks and/or effect wire transfers
within ten (10) business days of the release of the funds into the Escrow Account. All efforts
will be coordinated to limit the time between the Escrow Account’s receipt of the funds and the
issuance of Distribution Payments.
81.
All Distribution Payments will be issued by the Fund Administrator from the
Distribution Account. All checks will bear a stale date of ninety (90) days from the date of
issuance. Checks that are not negotiated by the stale date will be voided, and the Bank will be
instructed to stop payment on those checks. A Payee’s claim will be extinguished if he, she, or it
fails to negotiate his, her or its check by the stale date, and the funds will remain in the Fair
Fund, except if a check reissue has been requested before the stale date, such request is governed
by paragraph 90.
82.
All Distribution Payments will be preceded or accompanied by a communication
that includes, as appropriate: (a) a statement characterizing the distribution; (b) a statement that
the tax treatment of the distribution is the responsibility of each Payee and that the Payee should
consult his, her or its tax advisor for advice regarding the tax treatment of the distribution; (c) a
statement that checks will be void and cannot be reissued after ninety (90) days from the date the
15
original check was issued; and (d) contact information for the Fund Administrator for questions
regarding the Distribution Payment. The letter or other mailings to Payees characterizing a
Distribution Payment will be submitted to the Tax Administrator and Commission staff for
review and approval.
83.
All Distribution Payments, either on their face or in the accompanying mailing,
will clearly indicate that the money is being distributed from the Fair Fund established by the
Commission to compensate investors for harm as a result of securities law violations.
84.
Distribution Payments must be made by check or electronic payment payable to
the Payee (the beneficial account owner). A Third-Party Filer shall not be the payee of any
Distribution Payment check or electronic Distribution Payment. Any other payment arrangement
must be discussed with the Fund Administrator in consultation with the Commission staff and
must be authorized by the Payee. Compensation to a Third-Party Filer for its services may not
be paid or deducted from the Distribution Payment.
85.
If, after discussion with the Fund Administrator in consultation with the
Commission staff, and authorization by the Payee(s), a Distribution Payment is to be made to a
Third-Party Filer to distribute to the Payee(s), the Third-Party Filer will be required to complete
a certification, which will require them, at a minimum, to attest that any distribution to the
custodian, trustee, or investment professional representing multiple potentially eligible beneficial
owners, will be allocated for the benefit of current or former pooled investors and not for the
benefit of management. The certification form will be available on the Fair Fund website and
upon request from the Fund Administrator. All such Third-Party Filers must have an auditable
mechanism available to the Fund Administrator and the Commission staff to confirm that each
Payee received the Distribution Payment directed to them.
86.
The submission of a Claim Form and the receipt and acceptance of a Distribution
Payment by a Payee is not intended to be a release of a Payee’s rights and claims against any
party.
87.
Electronic or wire transfers may be utilized at the discretion of the Fund
Administrator to transfer approved Distribution Payments to filers of claims on behalf of twenty
(20) or more Payees. Wire transfers will be initiated by the Fund Administrator using a twoparty check and balance system, whereby completion of a wire transfer will require an
authorization by two members of the Fund Administrator’s senior staff.
88.
At the discretion of the Fund Administrator, certain costs that were not factored
into the Reserve, such as bank fees for the return of a payment, may reduce the Payee’s
Distribution Payment. In such situations, the Fund Administrator will immediately notify the
Tax Administrator of the reduction in the Distribution Payment.
Post Distribution; Handling of Returned or Uncashed Checks; and Reissues
89.
The Fund Administrator shall use its best efforts to make use of commercially
available resources and other reasonably appropriate means to locate all Payees whose checks
16
are returned to the Fund Administrator as “undeliverable.” If new address information becomes
available, the Fund Administrator will repackage the distribution check and send it to the new
address. If new address information is not available after a diligent search (and in no event no
later than ninety (90) days after the initial mailing of the original check) or if the distribution
check is returned again, the check shall be voided and the Fund Administrator shall instruct the
issuing financial institution to stop payment on such check. If the Fund Administrator is unable
to find a Payee’s correct address, the Fund Administrator, in its discretion, may remove such
Payee from the distribution and the allocated Distribution Payment will remain in the Fair Fund
for distribution, if feasible, to the remaining Payees.
90.
The Fund Administrator will reissue checks to Payees upon the receipt of a valid,
written request from the Payee prior to the initial stale date. In cases where a Payee is unable to
endorse a Distribution Payment check as written (e.g., name changes, IRA custodian changes, or
recipient is deceased) and the Payee or a lawful representative requests the reissuance of a
Distribution Payment check in a different name, the Fund Administrator will request, and must
receive, documentation to support the requested change. The Fund Administrator will review the
documentation to determine the authenticity and propriety of the change request. If, in the
discretion of the Fund Administrator, such change request is properly documented, the Fund
Administrator will issue an appropriately redrawn Distribution Payment to the requesting party.
Reissued checks will be void at the later of ninety (90) days from issuance of the original check
or thirty (30) days from the reissuance, and in no event will a check be reissued after ninety (90)
days from the date of the original issuance without the approval of Commission staff.
91.
The Fund Administrator will make reasonable efforts to contact Payees who have
failed to negotiate their Distribution Payment check and take appropriate action to follow up on
the status of uncashed checks at the request of Commission staff. The Fund Administrator may
reissue such checks subject to the time limits detailed herein.
Administrative Costs
92.
All Administrative Costs will be paid from the Fair Fund in accordance with the
Commission’s Rules.
Disposition of Undistributed Funds
93.
If funds remain following the initial distribution, the Fund Administrator, in
consultation with the Commission staff, may seek subsequent distribution of any available
remaining funds, pursuant to the Commission’s Rules.
94.
A residual will be established for any amounts remaining after the final
disbursement to Payees from the Fair Fund (the “Residual”). The Residual may include funds
from, among other things, amounts remaining the Reserve, distribution checks that have not been
cashed, checks or electronic payments that were not delivered or returned to the Commission,
and tax refunds received due to the Fair Fund’s overpayment of taxes or for waiver of IRS
penalties.
17
95.
Upon completion of the final distribution, the Fund Administrator will direct the
Bank to void/cancel all Distribution Payments, and return any funds remaining in the Escrow and
Distribution Accounts to the Commission to become part of the Residual.
96.
All funds remaining in the Residual that are infeasible to distribute to investors
will be returned to the Commission and transferred to the U.S. Treasury after the final
accounting is approved by the Commission.
Filing of Reports and Accountings
97.
In accordance with Rule 1105(f) of the Commission’s Rules, the Fund
Administrator shall provide to the Commission staff a progress report and a quarterly account
statement in a format to be provided by Commission staff, within forty-five (45) days of the
Commission’s approval of the Plan, and shall provide to Commission staff additional reports and
quarterly account statements within ten (10) days after the end of every calendar quarter. Such
progress reports shall inform the Commission staff of the activities and status of the Fair Fund
during the reporting period, and shall specify, at a minimum, the location of the account(s)
comprising the Fair Fund, including among other things, an interim accounting of all monies in
the Fair Fund.
98.
When the final distribution is completed, the Fund Administrator shall provide to
Commission staff a final report summarizing all tasks undertaken and the outcome of its
administrative efforts. The Fund Administrator shall make arrangement for the final payment of
all Administrative Costs, and submit a final accounting of all monies received, earned, spent, and
distributed in connection with the administration of the Plan in a format provided by the
Commission staff. The Fund Administrator will also submit a report to the Commission staff
containing the final distribution statistics regarding distributions to individuals and entities, and
such other information requested by the Commission staff.
Miscellaneous
99.
When administering this Plan, the Fund Administrator, and/or each of its
designees, agents and assigns, may rely on: all applicable law; orders issued by the Commission,
including orders issued by delegated authority; orders issued by an administrative law judge, if
any, appointed in this proceeding; and any records, including records containing investor
information, provided by Commission staff.
100. Should any additional funds be received pursuant to Commission or Court order,
agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such funds will
be added to the Fair Fund and distributed, if feasible, in accordance with the Plan, pursuant to the
Commission’s Rules.
Wind-down and Document Retention
101. The Fund Administrator will shut down the website, P.O. Box and customer
service telephone line(s) established specifically for the administration of the Fair Fund six (6)
18
months after the transfer of any remaining funds to the Commission, or at such earlier time as the
Fund Administrator determines with the concurrence of the Commission staff.
102. The Fund Administrator will retain all materials submitted by Preliminary
Claimants in either paper or electronic form for a period of six (6) years from the date of
approval of a final fund accounting. Materials maintained in electronic form must be accessible
and readable for the duration of retention. Pursuant to the Commission staff's direction, the Fund
Administrator will either turn over to the Commission or destroy all materials, including
documents in any media, upon expiration of this period.
Termination of the Fair Fund
103. The Fair Fund will be eligible for termination and the Fund Administrator will be
eligible for discharge after all of the following have occurred (a) a final accounting, in a standard
accounting format provided by the Commission staff, has been submitted by the Fund
Administrator and approved by the Commission; (b) all Administrative Costs have been paid;
and (c) any amount remaining in the Fair Fund has been returned to the Commission for transfer
to U.S. Treasury.
104. Once the Commission has approved the final accounting, the Commission staff
will seek an order from the Commission authorizing: (a) the transfer of any amounts remaining
in the Fair Fund that is infeasible to return to investors, and any amounts returned to the Fair
Fund in the future that are infeasible to return to investors, to the U.S. Treasury, subject to
Section 21F(g)(3) of the Exchange Act; (b) discharge of the Fund Administrator; (c) cancellation
of the Fund Administrator’s bond; and (d) termination of the Fair Fund.
105. Once the Fair Fund has been terminated and funds, if any, are transferred to the
U.S. Treasury, no further claims will be allowed and no additional payments will be made
whatsoever.
VII.
NOTICE AND COMMENT PERIOD
106. The Notice of Proposed Plan of Distribution and Opportunity to Comment (the
“Notice”) will be published on the Commission’s website at
http://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan
must do so in writing by submitting their comments to the Commission within thirty (30) days of
the publication of the Notice: (a) to the Office of the Secretary, United States Securities and
Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090; (b) by using the
Commission’s Internet comment form (www.sec.gov/litigation/admin.shtml); or (c) by sending
an email to rule-comments@sec.gov. Comments submitted by email or via the Commission’s
website should include “Administrative Proceeding File Number 3-20393” in the subject line.
Comments received will be available to the public. Persons should only submit comments that
they wish to make publicly available.
19
Exhibit A
PLAN OF ALLOCATION
This Plan of Allocation is designed to compensate investors based on their losses suffered as
a result of the Respondents’ conduct described in the Order, 1 involving false and misleading
statements and omissions made in connection with the offer and sale of SRAC common stock,
SRAC warrants, and SRAC units (consisting of one share of common stock and one-half of one
warrant) registered with the Commission and traded on the Nasdaq exchange with trading symbols
SRAC, SRACW, and SRACU, respectively (the “Securities”). Investors will be compensated for
losses on the Securities that they purchased or acquired between October 7, 2020 and July 13, 2021
(the “Relevant Period”). Investors who did not purchase Securities during the Relevant Period, or
who are an Excluded Party are ineligible to recover under this Plan.
Commission staff economists have calculated artificial inflation in the prices of the Securities
over various date ranges surrounding certain corrective disclosures that Momentous and SRAC
made 2 during the Relevant Period and the average closing prices of the Securities during the
“Lookback Period” (defined below), as reflected in Table A and Table B, respectively.
The Fund Administrator will calculate the amount of loss for each share, warrant, or unit of
the Securities purchased or acquired during the Relevant Period (“Recognized Loss per
Transaction”) as follows:
For each share, warrant, or unit of the Securities purchased or acquired on October 7, 2020
through July 13, 2021, and
A.
Sold on or after October 7, 2020, and prior to the close of trading on July 13, 2021,
the Recognized Loss per Transaction is the least of:
1.
the amount of inflation on the purchase/acquisition date as set forth in its
respective panel of Table A below for the security type minus the amount of
inflation on the sale date as set forth in its respective panel in Table A for the
security type; or
2.
the purchase/acquisition price minus the sale price; or
3.
the purchase/acquisition price minus the share redemption value, if the share
of common stock was redeemed under the exercise of redemption rights.
All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Plan.
On January 25, 2021, Momentus announced that Kokorich had resigned as CEO, and also announced on March 31,
2021 that Kokorich had placed his Momentus shares in a voting trust. In the Form S-4 registration statement filed on
June 29, 2021, Momentus and SARC disclosed that the El Camino Real mission was unsuccessful and that its
technology was not sufficiently reliable and efficient. ADD disclosure about national security risks and decline in
Momentous’ valuation. SRAC also disclosed that Momentous was forced to reduce its financial projections due to
adverse licensing decisions stemming from Kokorich’s national security risks, and contributed to a 50% decline in
Momentous’ enterprise valuation, from $1.1 billion to less than $600 million.
1
2
B.
C.
Sold after the close of trading on July 13, 2021 and prior to the close of trading on
August 12, 2021 (i.e., during the “Lookback Period”), the Recognized Loss per
Transaction is the least of:
1.
the amount of inflation per share on the purchase/acquisition date as set forth
in its respective panel of Table A for the security type; or
2.
the purchase/acquisition price minus the sale price; or
3.
the purchase/acquisition price minus the share redemption value, if the share
of common stock was redeemed under the exercise of redemption rights; or
4.
the purchase/acquisition price minus the moving average closing price for the
respective security type as set forth in its respective panel in Table B below.
Held as of the close of trading on August 12, 2021, the last day of the Lookback
Period, the Recognized Loss per Transaction is the lesser of:
1.
the amount of inflation on the purchase/acquisition date as set forth in its
respective panel of Table A for the security type; or
2.
the purchase/acquisition price minus the average closing price during the
Lookback Period, as set forth in the last row of its respective panel in Table B
for the respective security type.
If the Recognized Loss per Transaction calculates to a negative number, reflecting a gain, the
Recognized Loss per Transaction will be $0.00.
To avoid payment of a windfall, the Recognized Loss will be reduced by the amount of any
compensation for the loss that resulted from the conduct described in the Order that was received
from another source (e.g., class action settlement), to the extent known by the Fund Administrator.
All prices mentioned in the calculations exclude all taxes, fees and commissions.
Purchases/acquisitions and sales shall be deemed to have occurred on the “contract” or “trade” date
as opposed to the “settlement” or “payment” date.
Additional Provisions
FIFO Methodology: For each security type separately, transactions for a Preliminary
Claimant who made multiple purchases/acquisitions and sales during the Relevant Period, will be
matched according to the first-in, first-out (“FIFO”) method. The earliest sales during the Relevant
Period for each type of the Securities will be matched first against any holdings at the opening of the
Relevant Period. Once the beginning holdings for each type of the Securities have all been matched,
or in the event there are no beginning holdings, then any further sales will be matched against the
earliest Relevant Period purchases/acquisitions and chronologically thereafter for each type of the
Securities.
2
Acquisitions: The receipt or grant of the Securities by gift, devise, inheritance, or operation
of law during the Relevant Period is not considered an eligible purchase if the original purchase did
not occur during the Relevant Period. Securities acquired outside of the Relevant Period will be
excluded from the calculation of the Recognized Loss.
Options and Derivatives: SRAC common stock, warrants, and units are the only security
types eligible for recovery under this Plan. Option contracts to purchase or sell the Securities are not
securities eligible for recovery under the Plan. With respect to Securities purchased or sold through
the exercise of an option, the purchase/sale date is the exercise date of the call and the assignment
date of the put, and the purchase/sale price is the strike price of the call at the time of exercise and
the strike price of the put at the time of assignment. Transactions in the Securities during the
Relevant Period that are pursuant to, or in connection with, a swap or another derivative will not be
eligible for a recovery and will be excluded from the Recognized Loss calculation.
Short Sales: If the sale date falls before the purchase date, then the Recognized Loss per
Transaction will be $0.00. The date of covering a short sale is deemed to be the date of purchase of
the Securities and the date of a short sale is deemed to be the date of sale of the Securities. The
earliest Relevant Period purchases will be matched against any short position existing on the date
prior to the start of the Relevant Period, and not be entitled to a recovery, until that short position is
fully covered.
Recognized Loss: Recognized Loss will be the sum of the Recognized Loss per Transaction,
as calculated above, on all purchases/acquisitions of the Securities during the Relevant Period. If the
Recognized Loss calculates to a negative number (i.e., a gain), then the Recognized Loss will be
$0.00.
Market Loss Limitation: If a Preliminary Claimant’s actual market loss on transactions in the
Securities purchased/acquired during the Relevant Period is less than his, her or its Recognized Loss,
then the Preliminary Claimant’s Recognized Loss shall be limited to the actual market loss amount.
If the actual market loss calculates to a gain, then the Preliminary Claimant’s Recognized Loss will
be $0.00.
The actual market loss will be calculated for each type of the Securities as (a) the total
purchase amount for shares, warrants, or units purchased/acquired during the Relevant Period less
(b) the sales proceeds on any of those shares, warrants, or units sold or redeemed during the
Relevant Period, and less (c) the holding value on the remaining of those shares, warrants or units,
which for the purpose of this calculation, will be the price on the last date in Table B for the
respective security type. For Preliminary Claimants who transacted in multiple security types, the
actual market loss will be the sum of the market loss (or gain) on all security types, with a market
gains offsetting market losses.
Eligible Claimant: A Preliminary Claimant, who is not an Excluded Party, who submitted a
valid Claim Form and has suffered a Recognized Loss, as calculated above, will be deemed an
Eligible Claimant.
3
Allocation of Funds: If the Net Available Fair Fund is equal to or exceeds the sum of
Recognized Losses of all Eligible Claimants, each Eligible Claimant’s distribution amount will equal
his, her or its Recognized Loss, plus “Reasonable Interest” if applicable. If the Net Available Fair
Fund is less than the sum of the Recognized Losses of all Eligible Claimants, each Eligible
Claimant’s distribution amount will equal his, her or its “Pro Rata Share” of the Net Available Fair
Fund (and no Reasonable Interest). In either case, the distribution amount will be subject to the
“Minimum Distribution Amount.”
Reasonable Interest: If the Net Available Fair Fund exceeds that necessary to pay all Eligible
Claimants their Recognized Losses in full, the Fund Administrator, in consultation with the
Commission staff, may include interest in the distribution amount to compensate for the time value
of money on Recognized Losses. Reasonable Interest will be calculated using the Short-term
Applicable Federal Rate plus three percent (3%), compounded quarterly from the end of the
Relevant Period through the approximate date of the disbursement of the funds. If there are
insufficient funds to pay Reasonable Interest in full to all Eligible Claimants, Reasonable Interest
will awarded on a pro rata basis from the excess funds.
Pro Rata Share: A Pro Rata Share computation is intended to measure Eligible Claimants’
Recognized Losses against one another. The Fund Administrator shall determine each Eligible Claimant’s
Pro Rata Share as the ratio of his, her, or its Recognized Loss to the sum of Recognized Losses of all
Eligible Claimants.
Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00. An
Eligible Claimant whose distribution amount (inclusive of Reasonable Interest, if any) is less than
the Minimum Distribution Amount will be deemed ineligible to receive a Distribution Payment and
his, her, or its distribution amount will be reallocated on a pro rata basis to Eligible Claimants
whose distribution amounts are greater than or equal to the Minimum Distribution Amount.
Payee: An Eligible Claimant whose distribution amount equals or exceeds the Minimum
Distribution Amount will be deemed a Payee.
Distribution Payment: Payees will receive a Distribution Payment equal to his, her, or its
distribution amount. In no event will a Payee receive from the Fair Fund more than his, her, or its
Recognized Loss, plus Reasonable Interest, if applicable.
4
Table A: Inflation Schedules for SRAC Securities
Inflation per Security
SRAC
SRACW
SRACU
$10.88
$5.28
$11.66
$9.60
$4.65
$9.75
$6.80
$3.49
$5.96
$4.52
$1.97
$3.71
$2.98
$1.49
$3.32
$0.99
$0.80
$0.94
$0.00
$0.00
$0.00
Date Range
October 7, 2020 through January 4, 2021
January 5, 2021 through January 24, 2021
January 25, 2021
January 26, 2021 through March 7, 2021
March 8, 2021 through May 23, 2021
May 24, 2021 through July 13, 2021
On or after July 14, 2021
Table B: Moving Average Closing Price during Lookback Period SRAC Securities
Moving Average Closing Price from July 14,
2021 to Date Shown
Date
7/14/2021
7/15/2021
7/16/2021
7/19/2021
7/20/2021
7/21/2021
7/22/2021
7/23/2021
7/26/2021
7/27/2021
7/28/2021
7/29/2021
7/30/2021
8/2/2021
8/3/2021
8/4/2021
8/5/2021
8/6/2021
8/9/2021
8/10/2021
8/11/2021
8/12/2021
SRAC
$10.66
$10.52
$10.51
$10.61
$10.57
$10.53
$10.50
$10.46
$10.42
$10.38
$10.35
$10.33
$10.30
$10.28
$10.26
$10.25
$10.23
$10.19
$10.19
$10.20
$10.20
$10.24
SRACW
$2.36
$2.25
$2.18
$2.19
$2.16
$2.15
$2.14
$2.14
$2.12
$2.09
$2.07
$2.06
$2.03
$2.01
$1.99
$1.96
$1.94
$1.92
$1.90
$1.91
$1.91
$1.93
SRACU
$12.25
$11.75
$11.74
$11.83
$11.89
$12.02
$11.99
$11.90
$11.84
$11.79
$11.75
$11.68
$11.62
$11.56
$11.51
$11.45
$11.40
$11.37
$11.34
$11.32
$11.30
$11.34
5
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.