Shares of Lordstown Motors were sent plunging on Friday and even temporarily halted due to volatility, following news of a Department of Justice Investigation.
According to the Wall Street Journal, which cited people familiar with the matter, the US DOJ has opened a probe into embattled EV maker Lordstown Motors, marking yet another blow to the company which has been the subject of numerous allegations as of late. The DOJ criminal investigation follows a previous inquiry made by the Securities and Exchange Commission into Lordstown Motors, after short seller Hindenburg Research revealed that the automaker made inaccurate claims about its preorders.
Back in February, five of Lordstown’s executives made numerous stock sales that raised alarm among outside securities lawyers and accountants, many of whom questioned the automaker’s internal controls regarding executives’ trading. However, the stock sales were made ahead of the company’s reporting of quarterly financial results, which ultimately came short of performance expectations. In response, Lordstown appointed a special committee consisting of its board of directors to analyze the situation, and concluded that the stock sales were unrelated to the automaker’s performance.
Then, in March, short seller Hindenburg Research published a scathing report that alleged Lordstown made false claims about its preorders, particularly that the orders were non-binding and that supposed buyers had no intent to purchase the vehicles. Hindenburg Research also revealed that the EV maker is significantly behind schedule in meeting its planned September production start date. As a result of Hindenburg’s allegations, both Lordstown CEO Steve Burns and CFO Julio Rodriguez resigned in early June.
The latest criminal inquiry is being led by the US attorney’s office in Manhattan, said the individual familiar with the matter. A Lordstown spokesperson declined to comment, while the DOJ has yet to issue a statement regarding the investigation.
Information for this briefing was found via the WSJ. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.