Things are just going from bad to worse for bankrupt electric truck manufacturer Lordstown Motors after the Securities and Exchange Commission (SEC) filed a claim against it for $45 million, alleging that it violated federal securities laws.
The SEC has been investigating Lordstown Motors since 2021 when a bombshell report from short-selling research firm Hindenburg Research claimed that it had lied to investors about the number of preorders it had secured. This report led to the swift resignations of chief executive and founder Steve Burns as well as chief financial officer Julio Rodrigez.
Lordstown would go on to strike a deal with Foxconn to sell its manufacturing plant in Ohio and reached a deal for the iPhone manufacturer to build its planned Endurance pickup truck. However, that deal quickly turned sour and Lordstown was forced to file for bankruptcy last year.
Tech Crunch reports that the SEC filed a claim for $45 million against Lordstown in the firm’s Chapter 11 bankruptcy proceedings last week, describing the figure as “monetary remedies for violations of federal security laws.”
Read: Lordstown Founder And Ex-CEO Buys Firm’s Remaining Assets For $10 Million
Lordstown has previously said that it held confidential settlement talks with the SEC but has not yet reached an agreement. It says that “any recovery by the SEC will reduce recoveries to the Company’s stockholders” and that “any potential settlement with the SEC or other parties for related securities claims or other matters is subject to significant uncertainty.”
If the SEC does move forward and fine Lordstown Motors $45 million, it will be the largest penalty for an EV startup since Nikola settled a case with the SEC for $125 million in 2021. It would also serve as the nail in the coffin for the brand after it agreed to pay Karma Automotive a $40 million settlement over allegations that it stole trade secrets and poached employees.
