Lawsuit alleges their statements led to artificially inflated stock prices
LORDSTOWN, Ohio (WKBN) – Another civil class action lawsuit has been filed against Lordstown Motors alleging company officials took advantage of misleading claims.
The lawsuit filed in North American District Court in Ohio on Friday by Sulayman Zuod lists the defendants as Lordstown Motors Corp., CEO Stephen S. Burns, CFO Julio Rodriguez, Chairman Rich Schmidt and COO of stamping Michael Fabian.
The lawsuit cites a recent report from Hindenburg Research, who alleged that the company had misled investors, focusing on demand and the company’s production capacities. He says his review shows that the company’s orders are largely fictitious and used as an accessory to raise capital and confer legitimacy.
The report responded to claims by Lordstown Motors that it had 100,000 pre-orders for the Endurance electric pickup truck. Hidenburg Research said many of these orders came from fake operations or from people who were unable or unwilling to actually make purchases.
Hidenburg Research is a short seller and financial experts say they have a financial interest in publishing such a report.
The lawsuit argues that due to these allegations by company officials, Lordstown Motors’ shares were inflated and officials cashed in, selling nearly $ 27 million of their personal stock.
The lawsuit also cites an interview with CEO Steve Burns on CNBC on March 18, in which Burns said he never said the company had orders because there was no product yet. He said the pre-orders were aimed at gauging interest in the product, the lawsuit claims, citing CNBC.
Stock prices fell after these reports.
According to the lawsuit, Zuod bought the shares of Lordstown Motors and was negatively affected by the developments.
The class action period begins on August 3, when Lordstown Motors announced that it would get a public listing following a merger with acquisition company DiamondPeak Holdings Corporation.
The lawsuit seeks damages, as well as costs and attorneys’ fees for the plaintiff and the class members.
The CEO of the company previously brushed aside allegations from Hindenburg Research, saying Lordstown Motors is doing legitimate business and there will always be “haters”.
Lordstown Motors officials announced on Wednesday that the first two beta versions of the Endurance pickup trucks have rolled off the production line. They said they pledged to start mass production of all-electric vehicles in September.
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