×

Ex-Lordstown Motors CEO challenges SEC order

LORDSTOWN — The founder and former chief executive of Lordstown Motors Corp. said the Securities and Exchange Commission “falsely characterized” his actions in documents concerning a settlement between the agency and the bankrupt electric-vehicle maker.

Lordstown Motors has agreed to pay $25.5 million to settle claims made by the commission that the company exaggerated and misled investors about the demand for its flagship vehicle, the Endurance truck.

According to the U.S. regulatory agency, Lordstown Motors claimed the company received more than 100,000 non-binding preorders for the pickup from commercial fleet customers, but the reality was most of the preorders “came from companies that did not operate fleets or intend to buy the truck for their own use,” a press release states.

The commission also found the company misrepresented its timeline for delivering the truck “by failing to account for production delays partially due to Lordstown’s inability to access many crucial parts,” the release states.

“We allege that, in a highly competitive race to deliver the first mass-produced electric pickup truck to the U.S. market, Lordstown oversold true demand for the Endurance,” Mark Cave, associate director of the Division of Enforcement, said. “Exaggerations that misrepresent a public company’s competitive advantages distort the capital markets and foil investors’ ability to make informed decisions about where to put their money.”

The order finds that Lordstown violated certain antifraud, proxy and reporting provisions of the federal securities law, the release states.

According to the release, “without admitting or denying” the agency’s findings and still needing bankruptcy court approval, the company agreed to a cease-and-desist order and disgorgement of $25.5 million, which will be deemed satisfied by payments of up to $25.5 million by Lordstown Motors and other defendants to resolve certain pending class action lawsuits against the company.

The lawsuits are pending in Ohio and Delaware.

The order states Lordstown Motors and its founder and former CEO, Steve Burns, “made materially false and misleading statements” about the business in commission filings and other public statements.

Burns, 64, has not been charged.

“Although I have not been charged by the SEC, they have falsely characterized my actions in their settlement” with Lordstown Motors, Burns said in an emailed statement.

“I categorically reject the suggestion that my actions constituted wrongdoing. The facts and the truth are supposed to matter. This is not the way our system is supposed to work,” Burns said in the email.

Burns founded the company in 2019 to mass produce electric work trucks and worked out an agreement with General Motors to purchase its former Lordstown small-car assembly plant to manufacture the vehicles for just $20 million.

Lordstown Motors became a publicly traded company in October 2020 through a merger with DiamondPeak Holdings Corporation, a special purpose acquisition company, or “blank check” company, and went on to raise $675 million from investors.

He left the company in June 2021, without a stated reason by Lordstown Motors, but his departure was in sync with an admission by the company that statements regarding preorders for the Endurance were inaccurate.

He was given a $750,000 severance package, paid over 18 months, when he left.

In November 2021, Burns started unloading shares in the company and took away a total of more than $66 million.

In October, his LAS Capital Inc. acquired certain assets from Lordstown Motors for the design, production and sale of electric light-duty trucks for $10.2 million for its affiliate, LandX.

Have an interesting story? Contact the newsroom by email at news@tribtoday.com Follow us on X, formerly Twitter, @TribToday.

NEWSLETTER

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)
Are you a paying subscriber to the newspaper? *
   

Starting at $4.85/week.

Subscribe Today