SEC Settles Fraud Charges Against Former Lordstown Motors CEO
YOUNGSTOWN, Ohio – The U.S. Securities and Exchange Commission announced Friday that it has settled fraud charges against the former CEO and chairman of Lordstown Motors Corp., Steve Burns.
The charges and settlement are part of litigation filed in U.S. District Court in Washington D.C.
The SEC’s complaint charges Burns with violating the antifraud provisions of the Securities Act of 1933. Without admitting or denying the SEC’s allegations, Burns consented to a permanent injunction, to pay a $175,000 civil penalty, and to be prohibited from serving as an officer or director of a publicly traded company for a period of two years. The settlement is subject to court approval.
According to the SEC’s complaint, Burns made misleading statements about Lordstown’s business in SEC filings and other public statements, including that Lordstown had an established base of customer demand evidenced by more than 100,000 nonbinding pre-orders for its flagship vehicle, the Lordstown Endurance electric pickup.
As the complaint alleges, these statements were misleading because most of the pre-orders were not submitted by commercial fleet customers, but rather by companies that did not operate fleets or intend to buy the truck for their own use, thereby creating an unrealistic and inaccurate depiction of demand for the truck from commercial fleet customers, the SEC said in a statement.
Burns and the company’s chief financial officer resigned in 2021 after a short-seller report questioned executive statements related to pre-orders. An internal inquiry found that some of these statements were misleading.
In February, the SEC charged Lordstown Motors with violating federal securities law. Lordstown agreed to a cease-and-desist order and disgorgement of $25.5 million to satisfy pending class action actions against the company.
Lordstown Motors filed Chapter 11 bankruptcy on June 27, 2023. The EV company once owned and operated out of the former General Motors Lordstown plant. In late 2021, Foxconn purchased the plant and entered into a contract manufacturing agreement with Lordstown Motors to produce the Endurance.
In October, Burns, through his investment company LAS Capital LLC, purchased Lordstown Motors’ assets out of bankruptcy court for $10 million. He has since started a new venture LandX.
Meanwhile, Lordstown Motor emerged from bankruptcy last week as a reconstituted company, Nu Ride.
Pictured at top: Steve Burns, November 2021 File Photo.
Copyright 2024 The Business Journal, Youngstown, Ohio.
