In August, Canadian space hardware manufacturer MDA Space signed a short-lived, $1.8-billion CAD contract with American telecom EchoStar. A class-action lawsuit now alleges that the company failed to disclose the risks associated with that contract and that insiders “unjustly enriched” themselves in the month before it was terminated.
The class-action suit, which was launched by two retail investors, one in British Columbia and one in Québec, has yet to be certified. It’s seeking up to $340 million in damages, plus costs, from MDA and its leadership for allegedly misrepresenting the contract’s risks while insiders financially benefited from the company’s stock price hitting an all-time high while it was in effect.
The class action is looking to represent those who purchased shares of MDA Space after the contract was announced, but before it was cancelled.
Toronto law firm Sotos filed the class-action documents with the Ontario Superior Court of Justice in October and November. The allegations have yet to be proven in court, and MDA has not filed its defence.
MDA CEO Mike Greenley did briefly acknowledge the proposed class action before the company’s Q3 earnings call in November. Greenley said that “MDA Space believes the claims are without merit and intends to vigorously defend itself,” according to a transcript.
In a statement to BetaKit, an MDA spokesperson noted that the company publicly disclosed it had received notice of the proposed lawsuit in its Q3 earnings, before it had been served a formal statement of claim.
“MDA Space strongly believes that all the claims that have been alleged are unfounded and without merit and intends to vigorously defend itself and the named defendants through the process,” the spokesperson said.
The Brampton, Ont.-based company was selected as the prime contractor for EchoStar’s new satellite constellation, setting it up to design, manufacture, and test more than 100 satellites in August. The contract was terminated in September when EchoStar sold its wireless spectrum licenses to Elon Musk’s SpaceX.
The sale followed a US Federal Communications Commission (FCC) probe into EchoStar, launched after SpaceX complained the company “barely” used its spectrum for satellite connectivity. That probe is the basis of the lawsuit.
In their statement of claim, the plaintiffs allege that MDA knew that EchoStar was in a regulatory battle with the FCC but didn’t disclose the possibility of the contract being cancelled. The allegations state that the only mention came when Greenley was questioned about it on an August earnings call, where he downplayed any risk as “very, very small.”
RELATED: MDA Space reports 45-percent year-over-year revenue growth in Q3 after losing EchoStar contract
When the contract was cancelled, MDA claimed it was due to a “sudden change” in EchoStar’s business strategy. The proposed lawsuit disputes this, instead posing that it “was the foreseeable and likely outcome of EchoStar’s months-long regulatory battle with the FCC.”
After nabbing the contract, MDA’s stock traded at an all-time high of around $44 per share on the Toronto Stock Exchange (TSX). The lawsuit alleges that, throughout August 2025, Greenley and other insiders became “unjustly enriched” as they sold tens of millions of dollars worth of MDA shares with the undisclosed knowledge that the contract could be impacted by EchoStar’s FCC battle.
When the contract was terminated in September, MDA’s stock price declined over a period of days to just under $31 per share, “causing MDA shareholders millions of dollars of losses” while insiders, including Greenley, “made tens of millions,” the filings state.
The class action is looking to represent those who purchased shares of MDA Space after the contract was announced, but before it was cancelled.
Despite losing the contract, MDA reported 45 percent year-over-year revenue growth in its Q3 earnings in November. The company went on to become one of the first recipients of a contract under the Canadian government’s new Defence Investment Agency in December, and signed a contract with the US Department of War this month to potentially help with the “Golden Dome” missile defence project.
MDA shares are trading at $38.37 per share on the TSX as of Friday afternoon, not too much less than the approximately $38.80 per share MDA was trading at before it signed the EchoStar contract.
UPDATE (01/30/2026): This story has been updated with a response from an MDA Space spokesperson.
Feature image courtesy MDA Space.