DOJ is probing Lordstown Motor for alleged falsification of pre-order data: WSJ

The Justice Department is investigating the electric truck startup Lordstown Motors Corp., WSJ reported, citing the sources familiar with the matter.

The investigation against the company is being handled by the United States Attorney's Office in Manhattan, is still in its early stages.

The DOJ investigation follows a Securities and Exchange Commission investigation into the company and public comments made by executives, including its former chairman and CEO Steve Burns.

According to company filings, the SEC initially requested information from Lordstown Motors in February and has filed subpoenas investigating Lordstown Motors' effort last year to become a public company and its claims concerning preorders.

The company’s shares plummeted 8.8 % to $9.44 at 1:25 p.m. in New York after falling to $8.56, its lowest intraday price since May 25. The stock had fallen by 48% this year through Thursday.

Lordstown, which purchased a defunct General Motors Co. facility in Ohio in 2019, has been attempting to start producing electric pickup trucks by September. The firm went public in November after a $675 million merger with special purpose acquisition company DiamondPeak Holdings.

In March, the stock plummeted when financial research company Hindenburg Research revealed a short position in the stock, alleging that Lordstown had deceived consumers and investors about its $1.4 billion Endurance truck pre-orders.

Following the allegations, Lordstown Motors' CEO and CFO abruptly resigned, only days after the business had warned that it might not have enough cash to continue in business for the following year.

Meanwhile, a special committee formed by the company's board commissioned an investigation conducted by Sullivan & Cromwell LLP, which concluded that some statements about preorders were inaccurate, the company said; the committee also found the Hindenburg report false and misleading in other ways, the company said. 

The Ohio-based vehicle maker has been attempting to reorient itself since June 14, when it announced the leadership shift and committee report.

Meanwhile, Angela Strand, an independent board member, is functioning as executive chair while the firm seeks a new CEO.

With inputs from WSJ

Picture Credits: Forbes