Fired Lordstown Motors CEO settles with SEC for misleading investors

Fired Lordstown Motors CEO settles with SEC for misleading investors

Steve Burns, the ousted founder, chairman and CEO of bankrupt EV company Lordstown Motors, has settled with the U.S. Securities and Exchange Commission for misleading investors about demand for the company’s all-electric Endurance truck.

Burns was ordered to pay a civil penalty of $175,000 and cannot serve as an officer or director of a public company for two years. according to the agreement filed by the United States District Court for the District of Columbia. Without admitting or denying the SEC’s allegations, Burns agreed to the permanent injunction, fines and other terms in the agreement, according to the SEC.

The SEC sued Lordstown Motors in February 2024 for misleading investors about sales prospects for its Endurance electric pickup truck. The company agreed to pay $25.5 million. At the time, it was not clear that the SEC was also pursuing Burns.

Lordstown Motors was founded in April 2019 as an offshoot of another Burns company, Workhorse Group. The company went public the following year through a merger with special-purpose buyout firm DiamondPeak Holdings Corp., with a market value of $1.6 billion. During and after the merger, Lordstown received $780 million from investors, according to the SEC.

The company was among a group of EV startups that went public through mergers with low-cost companies in 2020 and enjoyed a surge in stock prices that recently fell again globally as they grappled with the challenge of producing and selling electric vehicles. Lordstown Motors attracted GM’s attention and investment and even acquired a 6.2 million square foot assembly plant in Lordstown, Ohio, from the automaker.

By June 2020, Lordstown had risen to the occasion after unveiling his electrifying image of Endurance at a political partisan event that featured former vice president Mike Pence, who spoke for 25 minutes about former President Trump’s policies on jobs and manufacturing, China and the COVID-19 response.

Burns told the crowd that it has received 20,000 pre-orders, a number that would have been covered in the entire first year of production if every customer who pre-ordered the truck followed through and bought the car. Burns later said the company had received 100,000 non-binding orders from commercial shipping customers.

Short seller research firm Hindenburg Research disputed the claims, and eventually Burns, along with other executives, would resign by June 2021.

The SEC later investigated the allegations and said Lordstown Motors and Burns made misleading statements about the business because many of the original orders were not submitted by commercial fleet customers, but by companies that neither operated the fleet nor intended to buy the trucks for them. use yourself. This, the SEC says, created a false and inaccurate picture of trucking demand from commercial fleet customers.

Lordstown continued on a rocky road even after Burns left, eventually filing for Chapter 11 bankruptcy protection. In March, Lordstown Motors emerged from bankruptcy with a new name and a closer focus: continuing its lawsuit against the automaker. iPhone Foxconn for allegedly “destroying the American company’s business.” The company is now known as Nu Ride Inc.

Burns has also moved on since his resignation. In January, Burns launched a new company called LandX Motors.