Redwire Must Face Investors’ ‘Tone at the Top’ Securities Suit

Redwire Corp. investors can move forward with a relatively novel securities fraud suit alleging some senior officers set a problematic tone about the space tech company’s internal controls.

Investors argue that Redwire was plagued by a “tone at the top problem,” referring to management’s attitude toward internal controls and ethics. Investors said they would’ve realized that investing in Redwire was risky if they had known about the problem.

“While proceeding on a ‘tone at the top’ theory of liability in this context is relatively novel, the amended complaint meets the pleading requirements for a securities fraud action,” Judge Timothy Corrigan ...