LORDSTOWN – A lawsuit filed July 27 claims executives from Lordstown Motors Corp. misled investors and failed to disclose the nature of the company’s partnership with Foxconn as a joint venture agreement and subsequent investment deal between the parties unraveled.
The class action complaint, filed in U.S. District Court for the Northern District of Ohio, alleges that Lordstown President and CEO Edward Hightower and Chief Financial Officer Adam Kroll violated federal securities law because they made false and misleading statements about the status of the company’s relationship with Foxconn.
The complaint, filed by investor and lead plaintiff Bandor Lim, seeks unspecified damages to be awarded at trial.
According to the lawsuit, Hightower and Kroll “repeatedly made and/or caused Lordstown to make false and/or misleading statements, or in some instances, representing that Foxconn was working cooperatively with Lordstown when in fact, the partnership soon stalled after the execution of the JV agreement.”
The complaint represents investors who acquired shares of Lordstown Motors between Aug. 4, 2022, and June 26, 2023. The lawsuit alleges that during that time Lordstown executives knew Foxconn was acting in bad faith and failing to live up to its commercial and financial commitments but omitted facts to investors.
It wasn’t until June 27, 2023, the day Lordstown Motors filed for Chapter 11 bankruptcy and sued Foxconn for fraud, that investors became aware that the partnership had been in jeopardy for a long period of time, and that “Foxconn’s conduct toward Lordstown had been anything but cooperative,” court papers say.
Specifically, documents show that during this period, Foxconn failed to grant Lordstown Motors access to design data, never participated in budget or timeline negotiations and failed to engage with the company on “the most basic items,” the complaint says.
“Lordstown knew but failed to disclose that the financial life of the company was imperiled by its strained relationship with Foxconn and if the partnership failed, the company faced bankruptcy,” according to the lawsuit.
