CarLotz Investors’ SPAC Merger Suit Trimmed of ‘Scheme’ Claim

CarLotz Inc. investors can’t keep a “scheme to defraud” claim in their suit over a merger between the used car dealership’s predecessor and a blank-check company, a federal court ruled.

The investors failed to adequately allege that the companies engaged in deceptive acts, such as disseminating misleading statements made by others, Judge Arun Subramanian said Aug. 23 for the US District Court for the Southern District of New York. Without such allegations, a claim that the companies engaged in a fraudulent scheme to sidestep the traditional initial public offering process through the January 2021 merger can’t proceed, he said.

The ...