The Securities and Exchange Commission (SEC) has filed a claim for $45 million in Lordstown Motors’ Chapter 11 bankruptcy proceedings. The claim stems from alleged violations of federal securities laws by the electric vehicle (EV) startup. Despite ongoing settlement talks between Lordstown Motors and the SEC, the agency’s claim could have significant ramifications for the company and its creditors. This development comes as the SEC’s investigations into EV startups have led to a series of settlements and penalties in the industry.
Key Takeaway
The SEC has filed a $45 million claim against Lordstown Motors in its bankruptcy proceedings, signaling the culmination of investigations into alleged securities law violations. The outcome of the ongoing settlement talks and the potential impact on the company and its stakeholders remain key areas to monitor.
SEC Investigations and Lordstown Motors
The SEC initiated its probe into Lordstown Motors in 2021 following allegations of fraud made by the short-selling research firm Hindenburg Research. Among the claims was that Lordstown had misrepresented the number of preorders for its electric pickup truck. Subsequently, Lordstown conducted an internal investigation, leading to the resignation of CEO and founder Steve Burns and CFO Julio Rodriguez. Despite this, the SEC continued its investigation, issuing subpoenas and delving into the startup’s actions.
Lordstown Motors’ Struggles and Settlement Talks
Following the investigations, Lordstown Motors faced challenges, ultimately entering into a bankruptcy protection process. The startup engaged in confidential settlement discussions with the SEC, seeking to resolve the matter. However, as the talks approached the bankruptcy proceeding’s deadline for creditor claims, the SEC filed its claim for monetary remedies for the alleged securities law violations.
SEC Investigations in the EV Industry
The SEC’s scrutiny extended beyond Lordstown Motors, encompassing various EV startups that went public through SPAC mergers. Several companies, including Hyzon, Spruce Power, and Canoo, faced penalties as a result of SEC investigations. While some investigations were concluded with penalties, others, such as those involving Lucid Motors and Workhorse, were dropped without enforcement action. Notably, the SEC’s probe into Faraday Future remains ongoing.
