Electric vehicle (EV) startup Lordstown Motors
"We have in the past been and may in the future be subject to, or become a party to, litigation, regulatory actions, and government investigations and inquiries," the company said vaguely in a Securities Exchange Commission (SEC) filing. "We have cooperated, and will continue to cooperate, with these and any other regulatory or governmental investigations and inquiries."
Lordstown Motors also admitted that it had received subpoenas from the SEC demanding the production of documents and information and that the full scope of its business, from the initial special purpose acquisition company (SPAC) deal to vehicle pre-orders, is under investigation.
The SEC's attention was drawn to Lordstown Motors by short-seller Hindenburg Research, which alleged that the startup was lying to investors and faking pre-order numbers. While Lordstown countered with allegations that Hindenburg itself was misleading, the SEC's interest was still piqued.
The flurry of federal activity around Lordstown Motors is only some of the trouble facing the startup, which has suffered from dwindling finances to the point of warning investors. Whether or not the company will be able to launch a product successfully is a matter of uncertainty for investors. Despite assurances from the company that the September launch of its Endurance model of pickups will proceed as planned, confidence in Lordstown Motors' ability to do so remains middling.
Shares of Lordstown Motors have declined 7.6% since last Monday, mainly in response to the confirmation of the probe. The downward trend may also be affected in part by a Monday selloff, which began shortly after market open.