Justice Department Investigates Lordstown Motors Downfall and Electric Vehicle Startup Actions

Signage outside the Lordstown Motors Corp. headquarters in Lordstown, Ohio, Saturday, May 15, 2021.

Dustin Franz | Bloomberg | fake images

The Justice Department is investigating Lordstown Motors, CNBC learned, which caused shares in the conflicting electric vehicle start-up to drop as much as 17% on Friday.

The stock paused briefly due to volatility and fell around 10% to about $ 9.30 a share at 12:45 ET.

The Justice Department investigation, first reported by The Wall Street Journal and confirmed to CNBC by a person with knowledge of the investigation, follows a Securities and Exchange Commission investigation into the company and public comments made by executives, including its former president and CEO Steve. Burns

A company spokesperson declined to comment on the Justice Department investigation, but said in a statement: “Lordstown Motors is committed to cooperating with any government or regulatory inquiry and investigation. We look forward to closing this chapter so that our new leadership – and the entire dedicated team – can focus solely on producing the first and best full-size all-electric pickup truck, the Lordstown Endurance. ”

The DOJ did not immediately respond for comment.

Burns and his CFO left the SPAC-backed company following an internal investigation that found “issues regarding the accuracy of certain statements” surrounding the Lordstown pre-orders, specifically the seriousness of the orders and who was placing them. .

In May, short seller Hindenburg Research claimed that the company misled investors, even using “fake” orders to raise capital for its Endurance electric pickup. The short seller also said the truck was years away from being produced. Lordstown has maintained that it is on track to begin manufacturing the vehicle in September.

Lordstown Motors previously said that the internal investigation found that the Hindenburg report “is, in significant respects, false and misleading.”

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