- The Justice Department is probing Lordstown Motors, the WSJ reported.
- The SEC began probing the company earlier this year following accusations from a short-seller that the company misled investors.
- A Lordstown spokesperson did not respond to a request for comment about the reported probe by the DOJ.
- See more stories on Insider’s business page.
The US Justice Department is probing electric car startup Lordstown Motors, sources familiar with the matter told The Wall Street Journal.
The US attorney’s office in Manhattan has begun looking into the company and the inquiry is in the early stages, according to the publication. The Securities and Exchange Commission started looking into the company as well earlier this year following accusations from a short-seller that the company misled investors.
Lordstown has said it was cooperating with the SEC investigation. A Lordstown spokesperson did not respond to a request for comment about the reported probe by the DOJ.
Earlier this year, Hindenburg Research published a report alleging the electric-truck startup has misled investors regarding demand for its product, which the company’s CEO at the time had quantified as over 100,000 pre-orders.
The short-seller’s report caused the company’s stock to plummet. Since, Lordstown Motors has continued to struggle. Last month, its CEO Steve Burns, as well as several other employees resigned.
On the same day, the company released the results of its internal investigation into the short-seller’s allegations. It said that while it didn’t find any issues with the vehicle or its technology, Lordstown Motors had caused confusion about the demand for its electric truck. The internal investigation found that some preorders – letters of intent that require only a signature – had been secured from companies that did not intend to purchase the vehicle, while other companies that had signed letters of intent did not have enough capital to purchase it.
On June 15, Lordstown Motors’ President Rich Schmidt said the company had remedied the issue and had “basically binding” pre-orders. That same week, the company clarified that none of its pre-orders are binding.
Lordstown Motors has also been questioned for its executives’ trading after five Lordstown executives sold large portions of their stock ahead of the release of a lackluster financial report from the company that sent shares downwards.
The company has said it plans to start limited production of its electric pickup truck in September, though the company has already delayed the launch of the vehicle five times.