Lordstown Motors confirms DOJ probe into SPAC deal and preorders

Staff set up door hinges to the frame shell of a prototype Staying power electrical pickup truck on June 21, 2021 at Lordstown Motors’ meeting plant in Ohio.

Michael Wayland / CNBC

Embattled electrical automobile start-up Lordstown Motors has showed the Justice Division is investigating its trade, together with the SPAC deal that introduced the corporate public closing yr and its reporting of car preorders.

The affirmation comes two weeks after the federal inquiry was once first reported by means of The Wall Boulevard Magazine and confirmed to CNBC by means of an individual with wisdom of the investigation. It follows a probe by means of the Securities and Alternate Fee into the corporate and public feedback made by means of executives, together with its former Chairman and CEO Steve Burns.

Lordstown Motors stated in a submitting Thursday that it has “won two subpoenas from the SEC for the manufacturing of paperwork and knowledge, together with in terms of the Merger between DiamondPeak and Legacy Lordstown and pre-orders of cars, and now we have been knowledgeable by means of the U.S. Lawyer’s Place of job for the Southern District of New York that it’s investigating those issues.”

The corporate stated it has “cooperated, and can proceed to cooperate, with those and some other regulatory or governmental investigations and inquiries.”

Burns and his CFO exited the SPAC-backed company following an inside investigation that discovered “problems in regards to the accuracy of sure statements” round Lordstown’s preorders, in particular the seriousness of the orders and who was once making them.

In Would possibly, brief vendor Hindenburg Analysis claimed the corporate misled traders, together with using “fake” orders to lift capital for its Staying power electrical pickup. The fast vendor additionally stated the pickup was once years clear of manufacturing. Lordstown has maintained it is on target to start out making the automobile in September.

Lordstown up to now stated the inner investigation discovered Hindenburg’s document “is, in vital respects, false and deceptive.” 

Lordstown went public thru a different objective acquisition corporate, or SPAC, in October. It’s amongst a rising crew of electrical automobile start-ups going public thru offers with SPACs, that have change into a well-liked manner of elevating cash on Wall Boulevard as a result of they’ve a extra streamlined regulatory procedure than conventional preliminary public choices.

Correction: The DOJ inquiry was once first reported two weeks in the past. A prior model misstated that timing.

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