(Bloomberg) — Virgin Galactic Holdings Inc. was sued by an investor who claims he lost money when the space-tourism company announced that it would restate its results due to regulatory guidance about the accounting treatment of warrants.

The Las Cruces, New Mexico-based company said on April 30 that it would have to restate its 2020 results because of accounting guidance of regulators related to special purpose acquisition companies, or SPACs. The next trading day, its shares fell 9%. The company combined with Social Capital Hedosophia, run by former Facebook executive Chamath Palihapitiya, and went public in October 2019.

The Securities and Exchange Commission set forth new guidance in April that warrants, which are issued to early investors in the deals, might not be considered equity instruments and may instead be liabilities for accounting purposes. In a SPAC, early investors buy units, which typically includes a share of common stock and a fraction of a warrant to purchase more stock at a later date. They’re considered a sweetener for backers and many companies treated them as equity instruments for accounting purposes.

The investor, Shane Lavin, said in the lawsuit filed Friday in federal court in Brooklyn, New York, that Virgin Galactic and its executives knew that the results they were reporting were wrong. They are seeking class-action status for their lawsuit. Many other SPACs have made or are considering similar restatements due to the accounting treatment of warrants.

Virgin Galactic’s stock has been volatile. Since May 3, the day of the price drop that Lavin is suing over, its shares have climbed 55%.

Representatives of Virgin Galactic didn’t immediately respond to a request for comment.

The case is Lavin v. Virgin Galactic Holdings Inc., 21-cv-03070, U.S. District Court, Eastern District of New York (Brooklyn).

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