According to multiple media reports on Friday, the Justice Department is investigating Lordstown Motors Corp., which is in financial distress.
It’s the latest setback for the firm, which wants to start producing battery-powered commercial pickup trucks this fall at a former GM plant in the northeast Ohio town that bears its name and where GM made cars for 54 years.
Lordstown Motors (NASDAQ: RIDE), which went public last October after merging with special purpose acquisition company (SPAC) DiamondPeak Acquisition Corp., recently filed a notice of “going concern” with the Securities and Exchange Commission, stating that it may not be able to make it through the year without additional funding.
Already pummeled by earlier unfavorable news, the company’s stock fell on Friday, plummeting 11.30 percent to $9.18 near the end of trade. Lordstown stock reached a high of $29 in March, but it never recovered after a withering report by short-seller Hindenburg Research alleging the business had exaggerated pre-orders and was unprepared for production.
An ongoing SEC investigation has prompted a Justice Department investigation.
The Justice Department probe, which was initially reported by The Wall Street Journal and ascribed to unnamed sources, is shrouded in mystery. Similar stories appeared in the New York Times and CNBC, both ascribed to unidentified sources. The Justice Department would be following in the footsteps of the Securities and Exchange Commission, which has already issued subpoenas.
Lordstown Motors, for its part, has made several claims and retractions of having 100,000 pre-orders for its Class 2A truck based on a Chevrolet Silverado and Workhorse Group-licensed technology (NASDAQ: WKHS). Workhorse shares, which have been heavily shorted, plummeted more than 9% intraday on Friday.
On June 5, the board of directors accepted the resignations of founder and CEO Steve Burns and Chief Financial Officer Julio Rodriguez.
Denied the wrongdoing of five Lordstown executives who sold company stock in early February, prompting questions about the company’s internal controls over its executives’ trading from outside accountants and securities lawyers. A special committee of the company’s board of directors discovered the trades were unconnected to the company’s performance, which fell short of first-quarter earnings estimates, according to the Journal.
A call to the Department of Justice from FreightWaves seeking confirmation of an investigation was not returned quickly. Lordstown Motors issued a statement, but did not mention the DOJ investigation.
“Lordstown Motors is dedicated to assisting any regulatory or governmental investigations or enquiries. We’re excited to close this chapter so that our new leadership — and our whole dedicated staff — can focus exclusively on developing the Lordstown Endurance, the world’s first and best full-size all-electric pickup truck.”
Articles that are related:
Lordstown Motors reverses its decision on electric pickup orders (again).
Despite considerable setbacks, Lordstown Motors is pushing forward with its electric pickup.
As a SPAC-backed firm teeters, top Lordstown executives are leaving.
Alan Adler’s FreightWaves articles can be found here.
Image courtesy of Pixabay user Peter H.
One of our external writers wrote the previous article.
It has not been modified and does not represent Benzinga’s perspective./n
