Girard Sharp LLP Announces Investigation of Potential Fiduciary Duty Claims on Behalf of Stockholders of Talkspace, Inc.
March 23 2022 - 1:54PM
Business Wire
Girard Sharp LLP and Malmfeldt Law Group P.C. announce an
investigation of potential breach of fiduciary duty claims on
behalf of stockholders of Talkspace, Inc. (“Talkspace” or the
“Company”) (Nasdaq:TALK). Talkspace began as Hudson Executive
Investment Corporation (“HEIC”), a blank check company (also known
as a special purpose acquisition company, or SPAC). Prior to the
Company’s June 2021 merger with Talkspace, the Company’s directors
issued a proxy which urged stockholders to vote in favor of the
merger. The proxy may have misrepresented the Company’s business,
financials, and prospects. Additionally, in recommending the
merger, the Company’s directors had conflicting interests because
they held non-redeemable founder shares in the Company that would
only convert to valuable Class A Company shares if the Company
completed a merger.
If you purchased stock in the Company before the merger with
Talkspace and wish to discuss your recovery options, please provide
your information by clicking here. You can also contact attorney
Adam Polk of Girard Sharp by calling (415) 981-4800 or via email at
apolk@girardsharp.com, or attorney Paul Malmfeldt of Malmfeldt Law
Group by calling (312) 606-8625 or via email at
pdm@malmfeldt.com.
Investigation: Girard Sharp and Malmfeldt Law Group are
investigating whether the final proxy statement soliciting
stockholder approval of the merger with Talkspace may have
misrepresented its business, financials, and prospects, by
omitting, among other things, that: (i) Talkspace was experiencing
significantly increased online advertising costs in its B2C
business since the start of 2021; (ii) Talkspace was experiencing
lower conversion rates in its online advertising in its B2C
business; (iii) Talkspace was experiencing increased customer
acquisition costs and more tepid B2C demand than represented to
investors; (iv) Talkspace was suffering from increasing customer
acquisition costs and worsening growth and gross margin trends; and
(v) Talkspace had overvalued its accounts receivables from certain
of its health plan clients in its B2B business, which amounts
required adjustment downward.
On August 9, 2021, Talkspace revealed some issues relating to
increased customer acquisition costs due to rising digital
advertising costs while downplaying their impact, and confirmed a
material increase in customer acquisition costs since the beginning
of the year. On this news, Talkspace's stock price fell by nearly
19%. Subsequently, on November 15, 2021, Talkspace issued a press
release announcing Talkspace's financial results for the third
quarter of 2021 and revealing, among other things, that "[i]n the
third quarter we increased the allowance for credit losses on
receivables by $3.4 million, of which $2.8 million related to prior
quarters" and that "Q3 Net Revenue came in below management
expectations due to a lower number of B2C customers and a one-time
non-cash reserve adjustment for credit losses on receivables
related to prior periods." Talkspace also announced that day that
effective immediately Talkspace's co-founder, CEO, and board
member, defendant Oren Frank, was stepping down. Likewise, his wife
Roni Frank would also be stepping down from her position as Head of
Clinical Services and board member. On this news, Talkspace's stock
price fell by more than 36%, further damaging investors.
By December 30, 2021, the price of Talkspace common stock was
trading below $2 per share, 80% below the price shareholders would
have received if they had redeemed their shares instead of
approving the merger less than one year earlier.
ABOUT GIRARD SHARP LLP: Girard Sharp LLP is a national
litigation firm representing plaintiffs in class and collective
actions in federal and state courts. The firm serves individuals,
institutions and business clients in cases involving securities,
antitrust, consumer protection, and whistleblower laws. Our clients
range from individual consumers and small businesses to Fortune 100
corporations and public pension funds. Our attorneys have recovered
over a billion dollars for our clients against some of the nation’s
largest corporations, such as Raymond James, Peregrine Financial
Group, and Oppenheimer Funds, in cases arising from securities
fraud, false advertising and other unfair business practices.
Girard Sharp has been distinguished as a Tier 1 law firm for
plaintiffs’ class action litigation in the “Best Law Firms” list in
the survey published in U.S. News & World Report’s Money Issue.
Law360 named Girard Sharp as one of its Product Liability Groups of
the Year for 2021. In 2020, Girard Sharp was honored with the Daily
Journal’s “Top Boutiques in California” award. The National Law
Journal (NLJ) also has named Girard Sharp to its elite “Plaintiffs’
Hot List,” a selection of top U.S. plaintiffs’ firms recognized for
wins in high-profile cases.
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Girard Sharp LLP 601 California Street, Suite 1400, San
Francisco, CA 94108 Adam Polk, (415) 981-4800
apolk@girardsharp.com
Malmfeldt Law Group P.C. 120 N. LaSalle Street, Suite 2000,
Chicago, IL 60602 Paul Malmfeldt, (312) 606-6825
pdm@malmfeldt.com
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