CLEVELAND – A lawsuit was filed against shareholders against an electric truck start-up company on Thursday, alleging that it misled investors by making false claims about the number of pre-ordered trucks and progress in starting production at a former General Motors plant in Ohio.
The lawsuit filed by shareholder Chris Rico against Lordstown Motors Corp. in 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 issued late last week by investment firm Hindenburg Research, which holds a short position in shares of Lordstown Motors.
Read: Lordstown losses widen on short-term vendor disputes, company reveals SEC investigation
Burns, speaking during the company’s first earnings call on Wednesday, said the company’s board of directors had formed a special committee “to review issues” around the SEC investigation.
A company spokesman did not respond to a request for email comments about the process on Thursday.
The complaint is largely based on Hindenburg Research’s report that Lordstown Motors “has no revenue and no product sold” and “misled investors both in terms of demand and production capacity”.
The report and the process claimed that, according to a former employee, the estimated production is three to four years apart. Burns said production will begin in September.
The company claimed to have sold 100,000 trucks to various US fleets, but these orders, according to the lawsuit, are not binding.
The lawsuit showed that, according to documents, investors, business partners and former employees, “the company’s orders are largely fictitious and are used as a tool to raise capital and give legitimacy.”
The Hindenburg report said a recently announced $ 735 million transaction for 14,000 trucks was granted to an alleged buyer who does not operate a fleet of vehicles and is based in a small Texas apartment building.
The company received unwanted publicity in January, when a prototype vehicle caught fire 10 minutes after the initial test.