Current Cases

Matterport Shareholder Derivative Litigation

Status Current Case

Practice area Securities Litigation & Investor Protection

Court Court of Chancery of the State of Delaware

Case number 2024-0088-LWW


On February 6, 2024, Cohen Milstein and co-counsel filed a verified stockholders’ derivative complaint nominally, on behalf of Matterport Inc., against the Company’s directors, officers, their affiliated entities, and others, who were unjustly enriched by the Board of Directors’ (the “Board”) approval of a self-interested transaction.

Specifically, shareholders challenge the Board’s wrongful issuance of 23,460,000 “earn out shares” of Matterport common stock worth $225 million (the “Issuance”). Matterport’s board approved the issuance on January 31, 2022, to occur on February 1, 2022. A large percentage of those earn out shares, shareholders allege, were issued to Matterport insiders and their entity affiliates.

Shareholders further allege that the Board-approved issuance violated the benchmarks established in a February 7, 2021 merger agreement and was therefore a self-dealing breach of fiduciary duty and an act of corporate waste, which unjustly enriched recipients of the earn out shares at the expense of Matterport.

Case Background

Matterport (NASDAQ: MTTR), a Delaware corporation, is a 3D software company, headquartered in Sunnyvale, California.

Shareholders claim, the Board-approved issuance violated the February 7, 2021 merger agreement, pursuant to which the previously private Matterport and Gores Holdings VI, Inc., a publicly listed special purpose acquisition company (SPAC), and two Gores subsidiaries, merged. The merger agreement provided legacy Matterport’s shareholders with shares of the surviving public company, which took the name Matterport.

The merger agreement further contemplated the issuance of earn out shares to certain shareholders, but only if the volume weighted average price (“VWAP”) of Matterport’s common stock exceeded specified thresholds for 10 out of 30 consecutive trading days during a defined five-year period (i.e., the earn out period) beginning on January 18, 2022 (the “Triggering Events”).

Shareholders allege that Matterport’s VWAP never exceeded a Triggering Events’ price from January 18, 2022, the beginning of the earn out period through the date of the filing of this complaint. Therefore, no earn out shares were issuable under the merger agreement on February 1, 2022, or on any date thereafter through the date of the filing of this complaint.

Shareholders further allege that Matterport’s Board, undeterred, engaged in a flawed process to expand backward the earn out period defined by the merger agreement and acknowledged by the Company in many SEC filings, to apply fictitious Triggering Events on January 14, 2022, before the earn out period had even begun, and approved the Issuance based on that contrivance.

Shareholders seek, among other things, to award Matterport compensatory damages for the alleged wrongdoing, and awarding other and further relief as is just and equitable.