Lordstown Motors misled investors and violated antifraud, proxy, and reporting provisions of the federal securities laws, according to charges filed by the Securities and Exchange Commission (SEC). Lordstown filed for bankruptcy in 2023.
Without admitting or denying the SEC’s findings and subject to bankruptcy court approval, Lordstown agreed to a cease-and-desist order and “disgorgement” of $25.5 million, according to the SEC, which will be deemed satisfied by payments of up to $25.5 million by Lordstown and other defendants to resolve certain pending class actions against them. Disgorgement refers to the repayment of illegal gains.
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According to the SEC’s settled order, Lordstown exaggerated the demand for its Endurance electric pickup truck, claiming that the company had received more than 100,000 nonbinding “pre-orders” for the vehicle from commercial fleet customers. According to SEC, most of the pre-orders came from companies that did not operate fleets or intend to buy the truck for their own use.
The SEC’s order also found that Lordstown misrepresented the company’s timeline for delivering the Endurance by failing to account for production delays partially due to Lordstown’s inability to access many critical parts.
“We allege that, in a highly competitive race to deliver the first mass-produced electric pickup truck to the U.S. market, Lordstown oversold true demand for the Endurance,” said Mark Cave, associate director of the division of enforcement. “Exaggerations that misrepresent a public company’s competitive advantages distort the capital markets and foil investors’ ability to make informed decisions about where to put their money.”
Source: SEC
