Lordstown Motors now under federal investigation over preorders, merger
The startup electric truck-maker confirmed the federal investigation following a revealing report from short-seller Hindenburg Research.
More sour news for startup Lordstown Motors as it works to build its first electric Endurance pickup trucks this September. On Friday, the company confirmed it's under federal investigation. The government is now taking a close look at the company's vehicle preorders and the way it handled a merger with a shell company to list stock publicly.
Reuters first reported the news on Thursday, noting the investigation is underway with federal prosecutors in Manhattan. Lordstown said in a statement, "Lordstown Motors is committed to cooperating with any regulatory or governmental investigations and inquiries. We look forward to closing this chapter so that our new leadership -- and entire dedicated team -- can focus solely on producing the first and best full-size all-electric pickup truck, the Lordstown Endurance."
The US Securities and Exchange Commission also requested the company provide documents surrounding murky preorder numbers and the merger.
Hindenburg Research, the investment research firm that made a splash last year by bringing to light unsavory details about another electric truck startup, Nikola, issued a report in March disclosing it took a short-sell position on Lordstown. It alleged the company overstated preorders and the firm's overall financial health in order to raise finance. Lordstown later confirmed these details.
Following the company's most recent financial report, Lordstown saw its founder and CEO Steve Burns leave his role. Chief financial officer Julio Rodriguez also resigned. The financial report highlighted an internal company investigation showing the startup overstated the number of preorders it received for the electric truck and clarified it has zero binding orders. Lordstown also said it may not have enough capital to actually begin production of the truck this September as it searches for new investment.
