Delaware probes SpaceX disclosure fight

Delaware’s highest court is weighing whether a fund manager told investors enough after a Chinese-linked SpaceX deal unraveled in 2021. (courts.delaware.gov) The case is Leo Investments Hong Kong Limited v. Tomales Bay Capital Anduril III, L.P., and manager Iqbaljit Kahlon. The Delaware Supreme Court heard argument on Wednesday, April 15, 2026, in consolidated appeals numbered 415 and 428 of 2025. (courts.delaware.gov) The dispute started after Kahlon raised money to buy SpaceX shares for a fund and accepted capital from an affiliate of a publicly traded company based in the People’s Republic of China. Leo negotiated for the right to identify the investment in regulatory disclosures, and that disclosure triggered Chinese media coverage. (courts.delaware.gov) Vice Chancellor J. Travis Laster wrote on June 30, 2025, that SpaceX saw the coverage, objected, and told the fund manager he could not buy the shares if Leo stayed in the fund. Kahlon then removed Leo and returned its contribution under the fund agreement. (courts.delaware.gov) Laster ruled for the defendants on nearly every claim, including Leo’s fiduciary-duty and contract claims tied to the removal. He found one exception: Kahlon breached the duty of candor when he spoke with Leo after SpaceX’s decision, but the court awarded only nominal damages because it found no meaningful loss tied to that breach. (courts.delaware.gov) That narrow candor ruling is what pushed the case back into focus in Dover this week. Bloomberg Law reported that the justices pressed on how much “rear-view mirror” detail Delaware law requires when judges decide whether disclosures were adequate. (news.bloomberglaw.com) Leo’s opening brief says the key events ran from November 2 to November 23, 2021, and accuses Kahlon of concealing Leo’s negotiated disclosure from SpaceX, then blaming Leo after SpaceX’s chief financial officer saw an article on November 19. The defense brief frames the same period as a response to SpaceX’s objection and argues the trial court correctly rejected broader liability. (courts.delaware.gov 1) (courts.delaware.gov 2) The fight matters in Delaware because the state’s courts set many of the rules for how fund managers, directors, and controlling insiders must speak to investors when deals go sideways. A ruling that demands more backward-looking detail could sharpen what fiduciaries must disclose about who knew what, and when, after a transaction starts to fail. (news.bloomberglaw.com) (courts.delaware.gov) The Supreme Court has not issued a decision. For now, the June 30, 2025 Chancery ruling stands: Leo was forced out of the SpaceX fund, and the remaining live question is how much candor Delaware demands when that kind of exit is explained to investors. (courts.delaware.gov 1) (courts.delaware.gov 2)