Lordstown Motors confirms DOJ probe into SPAC deal and pre-orders

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Staff set up door hinges to the physique shell of a prototype Endurance electrical pickup truck on June 21, 2021 at Lordstown Motors’ meeting plant in Ohio.

Michael Wayland / CNBC

Embattled electrical automobile start-up Lordstown Motors has confirmed the Justice Division is investigating its enterprise, together with the SPAC deal that introduced the corporate public final yr and its reporting of auto preorders.

The affirmation comes per week after the federal inquiry was first reported by The Wall Avenue Journal and confirmed to CNBC by an individual with information of the investigation. It follows a probe by the Securities and Trade Fee into the corporate and public feedback made by executives, together with its former chairman and CEO Steve Burns.

Lordstown Motors mentioned in a submitting Thursday that it has “obtained two subpoenas from the SEC for the manufacturing of paperwork and knowledge, together with referring to the Merger between DiamondPeak and Legacy Lordstown and pre-orders of automobiles, and we’ve got been knowledgeable by the U.S. Legal professional’s Workplace for the Southern District of New York that it’s investigating these issues.”

The corporate mentioned it has “cooperated, and can proceed to cooperate, with these and another regulatory or governmental investigations and inquiries.”

Burns and his CFO exited the SPAC-backed company following an inner investigation that discovered “points concerning the accuracy of sure statements” round Lordstown’s preorders, particularly the seriousness of the orders and who was making them.

In Might, brief vendor Hindenburg Analysis claimed the corporate misled traders, together with using “fake” orders to lift capital for its Endurance electrical pickup. The brief vendor additionally mentioned the pickup was years away from manufacturing. Lordstown has maintained it is on monitor to start out making the automobile in September.

Lordstown beforehand mentioned the inner investigation discovered Hindenburg’s report “is, in important respects, false and deceptive.” 

Lordstown went public via a particular goal acquisition firm, or SPAC, in October. It’s amongst a rising group of electrical automobile start-ups going public via offers with SPACs, which have turn into a preferred approach of elevating cash on Wall Avenue as a result of they’ve a extra streamlined regulatory course of than conventional preliminary public choices.