CLEVELAND – A shareholder action was filed on Thursday against a start-up electric truck company, alleging that it misled investors by making spurious claims about the number of trucks ordered and the progress it made in starting production at a former General factory Motors in Ohio.
The lawsuit filed by shareholder Chris Rico against Lordstown Motors Corp. in a federal court in Youngstown seeks certification as a class action lawsuit.
Lordstown Motors RIDE,
CEO Steve Burns acknowledged that the US Securities and Exchange Commission is conducting an investigation based on a long and critical report published last week by investment firm Hindenburg Research, which holds a short position in Lordstown Motors shares.
Reading: Lordstown losses increase amid short selling dispute, company discloses SEC investigation
Burns, speaking during the company’s first earnings conference call on Wednesday, said the company’s board of directors formed a special committee “to review the issues” surrounding the SEC investigation.
A company spokesman did not respond to an email request for comment on the lawsuit on Thursday.
The complaint is largely based on the report by Hindenburg Research, which said that Lordstown Motors “has no revenue or salable product” and “deceived investors both in their demand and in their production capacity”.
The report and the lawsuit state that, according to a former employee, the estimated production is three to four years. Burns said production would begin in September.
The company announced that it has sold 100,000 trucks to several fleets in the United States. But these orders, according to the process, are not binding.
The lawsuit says that, according to documents, investors, business partners and former employees, “the company’s orders are largely fictitious and used as a support to raise capital and confer legitimacy.”
The Hindenburg report said a recently announced $ 735 million deal for 14,000 trucks was for an alleged buyer who does not operate a fleet of vehicles and is based on a small apartment building in Texas.
The company received unwanted publicity in January, when a prototype vehicle caught fire 10 minutes on its initial test drive.