(Bloomberg) -- Jefferies Financial Group Inc. sued a company acquired in a blank-check merger, claiming it received stock now worth only about $40,000 instead of a promised $7 million underwriting fee.
In a suit filed Thursday in New York, Jefferies said Rubicon Technologies Inc. violated an agreement to pay the fee in either cash or freely tradable shares. Instead, Rubicon allegedly paid Jefferies in restricted shares with a current market value much lower than the agreed fee.
The dispute highlights the depths to which the once-high-flying market for special purpose acquisition company deals has fallen. Jefferies said the roughly 500,000 shares it received were indeed worth $7 million at the time they were issued.
A Rubicon spokesman didn’t immediately respond to an email seeking comment.
Rubicon, which provides software to manage garbage hauling, was once touted as the “Uber of Trash” and attracted early investors including actor Leonardo DiCaprio, Henry Kravis and Paul Tudor Jones. It was acquired in 2022 by Founder SPAC in a deal valued at nearly $2 billion.
Shares in Rubicon fell precipitously after the merger. Trading was halted in June, and the company replaced its chief executive officer the following month. The stock is currently trading at around 6 cents a share.
Jefferies, which is suing Rubicon based on its agreement with Founder, claims the shares it received in 2023 weren’t registered with the US Securities and Exchange Commission and could not be traded.
The case is Jefferies LLC v. Rubicon Technologies Inc., New York State Supreme Court, New York County (Manhattan).
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