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Lordstown Motors Faces $45 Million SEC Claim: A Tale of Electric Vehicle Turmoil

Bankrupt EV startups, the stakes have soared to a potential $45 million as the SEC throws down the law violation
By Josefina Dipaolo
January 12, 2024

In the tumultuous landscape of electric vehicle (EV) startups, the saga of Lordstown Motors takes center stage as the Securities and Exchange Commission (SEC) files a significant claim of $45 million against the bankrupt company for alleged violations of federal securities laws. This development amplifies the challenges faced by EV startups and underscores the increasing scrutiny they face from regulatory bodies. As the echoes of the SEC's investigations reverberate through the industry, we delve into the intricacies of Lordstown Motors' troubles and the broader context of regulatory actions against emerging players in the EV sector.

The SEC's claim against Lordstown Motors unfolds as the aftermath of a series of investigations initiated in 2021, following allegations of fraud published by short-selling research firm Hindenburg Research. Among the accusations was Lordstown's purported deception of investors regarding preorders for its electric pickup truck. While internal probes led to executive resignations, the SEC persisted, eventually leading to the recent filing seeking monetary remedies for federal securities law violations. This not only puts Lordstown Motors on the brink of a substantial penalty but also raises concerns for its creditors.

Lordstown's predicament is not isolated, signaling a broader trend of increased regulatory scrutiny within the EV startup landscape. In 2023, the SEC announced several settlements and penalties related to its investigations into electric vehicle startups. From Hyzon to Spruce Power (formerly XL Fleet) and Canoo, the SEC has left no stone unturned, exposing misleading sales projections, false statements, and other deceptive practices.

As Lordstown Motors grapples with the potential $45 million penalty, the company's fate hangs in the balance. The SEC's relentless pursuit underscores the critical need for transparency and adherence to securities laws in the burgeoning electric vehicle industry. The repercussions extend beyond Lordstown, reflecting a broader push by regulatory bodies to ensure accountability and integrity within the rapidly evolving landscape of EV startups. The $45 million claim serves as a stark reminder that, in the world of innovation and disruption, compliance remains paramount for sustainable success.

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