Lordstown Motors’ ousted CEO settles with SEC for misleading investors

Steve Burns, the founder, chairman and CEO of bankrupt electric vehicle startup Lordstown Motors, has reached a settlement with the U.S. Securities and Exchange Commission over charges he violated the law on the company’s flagship all-electric Endurance pickup truck mislead investors on the demand side.

Burns was ordered to pay a $175,000 civil penalty and be barred from serving as an officer or director of a public company for two years, according to the agreement filed in the U.S. District Court for the District of Columbia. Burns agreed to the permanent injunction, fine and other provisions of the agreement without admitting or denying the SEC’s allegations, according to the SEC.

The U.S. Securities and Exchange Commission (SEC) in February 2024 accused Lordstown Motors of misleading investors about the sales prospects of its Endurance electric pickup truck. The company agreed to pay $25.5 million. It was unclear at the time whether the SEC was also pursuing Burns.

Lordstown Motors was founded in April 2019 as a spin-off of Burns’ other company, Workhorse Group. The company went public the following year through a merger with special purpose acquisition company DiamondPeak Holdings Corp., with a market capitalization of $1.6 billion. According to the SEC, Lordstown received $780 million from investors during and after the merger.

The company was one of a wave of electric vehicle startups that went public in 2020 through mergers with blank-check companies, and its stock price soared, only to quickly fall back to earth as it grappled with the challenges of producing and selling electric vehicles. Lordstown Motors attracted the attention and investment of General Motors, even acquiring the 6.2 million-square-foot assembly plant in Lordstown, Ohio, from General Motors.

By June 2020, Lordstown had shot to prominence after unveiling its Endurance electric pickup truck in a high-profile and politically charged ceremony that included former Vice President Mike Pence, who President Trump delivered a 25-minute speech on employment and manufacturing, China and COVID-19 policies. 19 responses.

Burns told the audience it had received 20,000 pre-orders, a number that would lock in the entire first year of production if every customer who pre-ordered the truck followed through and purchased the vehicle. Burns later said the company had received 100,000 non-binding reservations from commercial fleet customers.

Short-selling research firm Hindenburg Research disputed these claims, and ultimately Burns and other senior executives will resign in June 2021.

The SEC later investigated the allegations and said Lordstown Motors and Burns made misleading statements about the business because most reservation orders were not submitted by commercial fleet customers but by Submitted by companies that do not operate a fleet or intend to purchase trucks for them. Use it yourself. The SEC said this created an unrealistic and inaccurate picture of commercial fleet customers’ demand for trucks.

Even after Burns left, Lordstown continued on a rocky road and eventually filed for Chapter 11 bankruptcy. In March, Lordstown Motors emerged from bankruptcy with a new name and a near-single focus: continuing its lawsuit against iPhone maker Foxconn, accusing it of “undermining an American startup.” business”. The company is now known as Nu Ride Inc.

Burns also moved on after resigning. In January, Burns launched a new company called LandX Motors.