On May 17, 2023, Bowlero Corp. (NYSE: BOWL) published its 2023 Q3 financial which included the disclosure that it had a material weakness in its disclosure controls and procedures.
Following this news, shares of Bowlero dropped over 16% on May 18, 2023, causing significant harm to investors.
Why is Bowlero stock dropping?
On Thursday, May 17, 2023, Bowlero announced in its Q3 2023 financial results that the company had a material weakness related to “certain financial reporting processes, including acquisition accounting, accounting for fixed assets, and certain financial reporting disclosures.”
According to Bowlero, it also did “not design and maintain effective controls over system access controls to establish segregation of duties for those with roles and responsibilities for the general ledger.”
SPACs Like Bowlero Corp. (BOWL) Face Lawsuits and SEC Scrutiny
SPACs, or special purpose acquisition companies, are commonly known as “blank check” shell companies. SPACs provide an alternative to the traditional IPO process, and serve the primary purpose of raising investor proceeds to eventually acquire a private company.
While SPAC investors have the potential to realize significant gains, they are also much more vulnerable to market volatility and other types of fraud. Investors may be vulnerable to a variety of SPAC fraud by sponsors, including:
- Misrepresenting material facts related to the SPAC or the company to be acquired;
- Failing to properly investigate or conduct due diligence on the company to be acquired; or
- Engaging in self-dealing or failing to disclose conflicts of interest with the acquisition company.
SPACs have recently come under SEC scrutiny and investor lawsuits against SPACs are on the rise. According to MarketWatch, many of these lawsuits allege SPAC directors failed to disclose sufficient information about the companies they intended to merge with.
Our Securities Lawyers Have a Winning Record Against Companies Like Bowlero
Our securities lawyers have recovered over a billion dollars on behalf of our clients against behemoths, such as Chase Bank, Mastercard, and Anthem Blue Cross Blue Shield. Read more about our results.
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