DEFA14A: Forge Global Addresses Merger Lawsuits, Supplements Proxy

Forge Global Holdings, Inc. has filed supplemental disclosures to its definitive proxy statement in response to four lawsuits challenging its merger with The Charles Schwab Corporation.

Summary

• Forge Global Holdings, Inc. (the Company) is proceeding with its merger into Ember-Falcon Merger Sub, Inc., a wholly owned subsidiary of The Charles Schwab Corporation (Schwab), as per an agreement dated November 5, 2025.
• A special meeting of the Company's stockholders is scheduled for January 22, 2026, to vote on the merger.
• Four lawsuits have been filed against the Company and its board of directors, alleging materially incomplete and misleading disclosures in the definitive proxy statement related to the merger.
• The lawsuits seek injunctive relief, including enjoining or rescinding the merger, damages, and legal fees.
• The Company denies the claims' merit but is voluntarily supplementing the proxy statement to avoid potential delays or adverse effects on the merger and to minimize litigation costs.
• Supplemental disclosures include details on FT Partners' engagement as financial advisor, its prior relationships with Forge, and the independence assessment of Special Committee members.
• Schwab's initial offer was $42.50 per share, later revised to $45.00 per share in cash, and was not conditioned on senior management's post-merger employment.
• Key financial projections (Base Case Projections) for Net Revenue, Operating Expenses, Adjusted EBITDA, and Unlevered Free Cash Flow are provided through 2030, showing a projected shift from negative to positive EBITDA and ULCF by 2026.

Sentiment

Score: 6

Explanation: The filing addresses ongoing litigation which is a negative, but the company is taking proactive steps to mitigate risks and ensure the merger proceeds. The underlying merger agreement with an increased offer price and positive long-term financial projections provide a stable outlook, leading to a slightly positive sentiment.

Positives

• The Company is proactively addressing litigation by providing supplemental disclosures to mitigate risks of delay or adverse effects on the merger.
• Schwab increased its offer price from $42.50 to $45.00 per share in cash, indicating strong interest in the acquisition.
• The Special Committee and Board conducted due diligence, including assessing the independence of financial advisors and committee members despite prior relationships.
• Financial projections indicate a positive trend, with Adjusted EBITDA projected to turn positive in 2026 ($5,059 million) and grow significantly to $80,921 million by 2030.
• Unlevered Free Cash Flow is projected to turn positive in 2025 ($1,000 million) and increase to $73,000 million by 2029.

Negatives

• Four lawsuits have been filed against the Company and its board, alleging material disclosure deficiencies and seeking to enjoin or rescind the merger.
• The litigation introduces uncertainty and potential costs, risks, and delays to the merger process.
• The Company is incurring legal expenses to defend against these claims and to prepare supplemental disclosures.

Risks

• The occurrence of any event, change, or other circumstances that could give rise to the termination of the Merger Agreement.
• The risk that the Company's stockholders may not approve the transaction.
• The risk that necessary regulatory approvals may not be obtained or may be obtained subject to unanticipated conditions.
• Risks that any other closing conditions to the proposed transaction may not be satisfied in a timely manner.
• Risks related to potential litigation brought in connection with the proposed transaction, including the four lawsuits already filed.
• Risks related to financial community and rating agency perceptions of the Company and its business, operations, financial condition, and industry.
• Risks related to disruption of management time from ongoing business operations due to the proposed Merger.
• Effects of the announcement, pendency, or completion of the proposed Merger on the ability of the Company to retain customers, hire key personnel, and maintain relationships with suppliers and partners.
• Risks related to the potential impact of general economic, political, and market factors on the parties to the proposed Merger or the proposed Merger.

Future Outlook

The Company's management believes the claims and allegations in the lawsuits are without merit and that no further disclosure is legally required. However, to mitigate the risk of delaying or adversely affecting the merger and to minimize litigation costs, the Company has voluntarily provided supplemental disclosures. The merger is expected to proceed, with a special stockholder meeting scheduled for January 22, 2026. Financial projections anticipate significant growth in net revenue and a return to positive Adjusted EBITDA and Unlevered Free Cash Flow in the coming years.

Management Comments

• We believe that the claims and allegations in the complaints are without merit and that no further disclosure is required under applicable law.
• To avoid the risk of the claims delaying or adversely affecting the Merger and to minimize the costs, risks, and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, we have determined to voluntarily supplement the Definitive Proxy Statement.
• We specifically deny all allegations in the complaints and any assertion that additional disclosure was or is required.

Industry Context

This announcement reflects ongoing consolidation within the financial technology sector, where established financial institutions like Charles Schwab are acquiring specialized platforms like Forge Global. The litigation highlights the intense scrutiny and legal challenges that can accompany significant M&A transactions, particularly concerning disclosure requirements and corporate governance. The proactive steps taken by Forge Global to address these legal challenges are typical for companies navigating complex mergers to ensure deal completion.

Comparison to Industry Standards

• The use of a Special Committee and independent financial advisors (FT Partners) and legal counsel (Morris Nichols, Sullivan & Cromwell) aligns with best practices for corporate governance in M&A transactions, especially when potential conflicts of interest exist (e.g., financial advisor's stock ownership, prior board service).
• The disclosure of prior relationships of the financial advisor (FT Partners' stock ownership and CEO's prior board service) and Special Committee members (prior employment with Schwab) demonstrates adherence to transparency standards, even if compelled by litigation.
• The financial metrics provided (Net Revenue, Operating Expenses, Adjusted EBITDA, Unlevered Free Cash Flow) are standard for evaluating company performance and valuation in the financial services and technology sectors, used in analyses like Selected Public Companies Analysis and Discounted Cash Flow Analysis.

Management Changes

Corporate Governance

Legal Proceedings

• Christina Jocic v. Forge Global Holdings, Inc. et al., No. 25-cv-15078 (December 11, 2025), filed in the United States District Court for the Northern District of Illinois.
• Ryan Carroll v. Forge Global Holdings, Inc. et al., Index No. 656562/2025 (December 17, 2025), filed in the Supreme Court of the State of New York for the County of New York.
• Anthony Malone v. Forge Global Holdings, Inc. et al., Index No. 656570/2025 (December 18, 2025), filed in the Supreme Court of the State of New York for the County of New York.
• David Kendig v. Debra Chrapaty et al., No. C25-03803 (December 29, 2025), filed in the Superior Court of the State of California in and for the County of Contra Costa.

Related Party Transactions

• FT Partners and its affiliates beneficially owned 390,639 shares of Forge common stock, purchased in the ordinary course of business, at the time of FT Partners' opinion.
• Steven McLaughlin, Chief Executive Officer and Managing Partner of FT Partners, previously served on the Board of Forge from June 30, 2018, to May 26, 2022.

Stakeholder Impact

• Shareholders: Directly impacted by the merger consideration of $45.00 per share and the outcome of the lawsuits, which could affect the timing or completion of the merger.
• Employees: Potential impact on retention and hiring, as well as post-merger employment arrangements, as mentioned in forward-looking statements.
• Customers, Suppliers, and Partners: Potential impact on relationships and business operations due to the announcement, pendency, or completion of the merger.
• Board of Directors and Management: Facing litigation and dedicating time to address legal challenges and supplemental disclosures, potentially diverting focus from ongoing business operations.

Next Steps

• Hold a special meeting of stockholders on January 22, 2026, to vote on the proposed merger.
• Continue to defend against the pending lawsuits challenging the merger disclosures.

Key Dates

Recommendation

The filing primarily addresses litigation surrounding an agreed-upon merger with Charles Schwab at $45.00 per share. While the lawsuits introduce a degree of uncertainty and potential for delay, the company is actively taking steps to mitigate these risks and denies the claims' merit. For existing shareholders, holding the stock to realize the $45.00 per share merger consideration is the most logical strategy, assuming the merger is ultimately completed. New investors would be engaging in an arbitrage play, which depends on the current market price relative to the offer and the perceived risk of the merger failing, which is not explicitly detailed enough to recommend a 'buy' or 'sell' for new positions.

Keywords

Forge Global Holdings, Charles Schwab, Merger, Acquisition, SEC Filing, Proxy Statement, Litigation, Financial Technology, Corporate Governance, Financial Projections