SEC sues Lordstown Motors for misleading EV investors

Lordstown agreed to cease and desist from further violations in reaching the settlement, the SEC announced in press release Thursday. The total amount left will be considered satisfied through payments by Lordstown and other defendants to resolve pending actions against them, the agency added.

The settlement is pending bankruptcy court approval.

In a related administrative proceeding, Lordstown’s former auditor, Clark Schaefer Hackett and Co. (CSH), agreed to settle charges of alleged violations of auditor independence brought by the SEC and the Public Company Accounting Regulatory Board. CSH agreed to pay more than $80,000 in civil penalties, disgorgement, and interest; to be condemned; cease and desist; and improve its policies and procedures.

Details: Lordstown was founded in 2019 and went public in 2020 through a merger with a special purpose purchase company (SPAC), according to the SEC’s. the order.

During and after the merger, which raised $675 million from investors, Lordstown and its founder made false and misleading statements in SEC filings and other public statements, the agency alleged.

The reports claimed the Lordstown would be the “first to sell” an electric cargo truck for commercial shipping with tens of thousands of pre-orders from commercial shipping customers, according to the order.

The company and its founder “misrepresented the actual status of the original truck orders, whether Lordstown had access to the critical parts it needed to manufacture the trucks, and when the company would be able to deliver the trucks to customers,” the order said.

CSH provided accounting and financial reporting services to Lordstown when it was a private corporation but also audited the same financial statements in connection with Lordstown’s merger with the SPAC, according to the SEC.

Compliance considerations: Within 120 days after it different orderCSH must hire an independent consultant to review the audit, audit and quality control policies of the company.

The purpose of the consultant is “to make recommendations for the improvement of policies and procedures related to the adequacy, adequacy, structure, implementation, and effectiveness of the current CSH quality control related to education and monitoring for compliance,” the order said.

Lordstown and CSH did not respond to requests for comment. Both companies settled without admitting or denying the SEC’s findings.