Topics
Latest
AI
Amazon
Image Credits:Lordstown Motors
Apps
Biotech & Health
clime
Image Credits:Lordstown Motors
Cloud Computing
Commerce
Crypto
go-ahead
EVs
Fintech
Fundraising
Gadgets
stake
Government & Policy
computer hardware
layoff
Media & Entertainment
Meta
Microsoft
Privacy
Robotics
Security
Social
quad
Startups
TikTok
Transportation
Venture
More from TechCrunch
Events
Startup Battlefield
StrictlyVC
Podcasts
Videos
Partner Content
TechCrunch Brand Studio
Crunchboard
Contact Us
The Securities and Exchange Commission haschargedbankrupt Lordstown Motors with misleading investors about the sales candidate of its Endurance electric pickup truck .
Lordstown has check to give $ 25.5 million as a resultant role — money that the SEC says will go toward settle a telephone number of pending grade activeness lawsuits against the ship’s company .
“ We allege that , in a highly private-enterprise race to deliver the first mass - produced galvanizing pickup truck to the U.S. grocery , Lordstown oversold true demand for the Endurance , ” Mark Cave , associate director of the SEC ’s Division of Enforcement said in a statement . “ hyperbole that misrepresent a public ship’s company ’s private-enterprise advantages color the capital markets and transparency investor ’ ability to make informed conclusion about where to put their money . ”
The SEC says its investigation into Lordstown Motors — which began in 2021 — is ongoing . Lordstown is still in the physical process of Chapter 11 failure . Steve Burns recently purchase the absolute majority of the assets associate to the Endurance and is using it to promotea new startupcalled LandX. He is not specifically charged in the SEC ’s order .
“ Although I have not been rouse by the SEC , they have incorrectly characterized my actions in their settlement today with Lordstown Motors , ” Burns order in a statement provided to TechCrunch . “ I flatly refuse the suggestion that my legal action constituted wrongdoing . The fact and the truth are supposed to matter . This is not the way our system is supposed to exercise . ”
According to the SEC , Lordstown and its beginner Steve Burns not only fake how many preorders it had for the Endurance , but also lied about having access to all the region required to build the hand truck .
“ These statements differentiate investors that Lordstown would be first - to - market place with a feasible electrical pickup truck targeted for the commercial-grade fleet market , and Lordstown already had an establish base of customer demand evidence by tens of G of ‘ pre - orders ’ from commercial fleet customers , ” the commission writesin the decree denote the charges . “ have sex that this first - mover advantage would be decisive to the company ’s achiever , Lordstown and Burns misrepresented the true nature of the pre - order for the truck , whether Lordstown had access code to the key parts it needed to make the motortruck , and when the company would be capable to deliver the truck to customers . ”
Join us at TechCrunch Sessions: AI
Exhibit at TechCrunch Sessions: AI
The SEC explain that Lordstown ’s sales team start out contacting likely fleet customers in early 2020 and asked them to sign nonbinding letters of intent to purchase the Endurance . The caller then turned around and defend those missive as preorders in public statements and regulative filings .
give the impression of a turgid lodge Word was all important to make the startup look legitimate , and at one percentage point the SEC says Burns “ directed Lordstown ’s salesteam to obtain additional pre - order from customers to increase the total amount because pre - orders were‘[r]eally of import to the investment community of interests and to our prospect[ive ] fleet customer . ’ ”
But Lordstown ’s sales team was “ comprised mostly of individuals with no sale experience in the self-propelling diligence , [ and ] were not given any instructions or guidance to determine whether a client was a commercial fleet client , ” the SEC writes . By January 2021 , Burns was touting 100,000 preorders for the Endurance , which he said was “ unprecedented in automotive story . ”
It all lead off crashing down three month by and by , when short - selling research house Hindenburg Research bring out a theme about Lordstown say that most of the preorders were fake . An internal investigation bear by Lordstown ’s circuit board of managing director find that this was for the most part true , as one supposed large buyer “ did not seem to have the resources to complete large purchases of truck , ” according to the SEC ’s account of the events . The internal probe also discovered many other customers had only allow for “ committal that appeared too vague or rickety ” to be include in the full count .
Lordstown had said when it went public in a 2020 merger with a special purpose acquisition company ( SPAC ) that it would have access to part from GM , which sell a factory to the startup and provided it with financial backing . It was supposed to be another legitimizing vista of Lordstown ’s business organization . But it was n’t really the casing , according to the SEC .
Instead , “ the parts were made by GM ’s suppliers under GM ’s authorization , which was a complex , time - use up process with no certainty as to whether GM would ultimately authorise Lordstown to use the parts , ” according to the order of magnitude . Lordstown management knew this before completing the SPAC merger . One officer told Burns in October that it had authorisation for just four of 90 parts it had quest and that the timing of the Endurance “ is now in endangerment ” as a result .
In fact , GM told Lordstown and Burns in December of that year that Lordstown ’s share request could burden the machine giant ’s own supply Ernst Boris Chain and told them to find a backup option . But Lordstown kept promote in regulatory filings that it had access to the division , and Burns said in a November CNBC audience that GM “ has opened up their part ABA transit number . ”
“ The parts bin is very very valuable to us , ” he said .
The SEC says that not only was this misleading , but that Lordstown did have to source parts from other suppliers , tot an additional $ 150 million in cost to the Endurance program .
Through all of this , Lordstown and Burns kept promoting a ship date of September 2021 , and it stuck to that escort in rescript to promote the idea of being the first electric pickup hand truck to market — even though it cognize internally it could not bump off that date , accord to the SEC .
This story has been update to let in a statement from Steve Burns .
