The Securities and Exchange Commission issued two submissions asking for documents related to the company’s merger with DiamondPeak, a special-purpose acquisition company.New Delhi: Lordstown Motors, an Ohio company that is in control of the number of orders it has made for the electric trucks it plans to produce, has confirmed that it has received two subpoenas from federal regulators and that the New York prosecutor’s office has opened an investigation.
The Securities and Exchange Commission issued two submissions asking for documents related to the company’s merger with DiamondPeak, a special-purpose acquisition company.
Special Purpose Acquisition Companies, or SPACs, have gained prominence this year as a quick way to publicly trade and list stocks on a stock exchange.
SPACs can cut the time it takes a company to get its stock trading on an exchange by up to 75% compared to the traditional process of going public. SPACs can also make it easier to get potential buyers on board. For example, companies taking the SPAC path often feel more justified in highlighting predictions of great growth that they expect in the future. In a traditional IPO, the company limits itself to listing its past performance, which is not a good selling point for young startups who typically don’t make big profits or revenues.
That dynamic is playing out as Lordstown’s operations come under increasing scrutiny from which it was partially shielded when it went public through a SPAC.
Last month, Lordstown admitted it had no firm orders for its vehicles days after its president said the company had enough of them to keep production going through 2022.
The company’s CEO and CFO resigned that same week.
In his SEC filing, Lordstown said the US Attorney’s Office for the southern borough of New York is “investigating” these matters.
It said it will cooperate in any investigation and investigation.
Stocks of Lordstown Motors Corp., which had suffered for the past few weeks, fell 2% on Friday. The stock has lost nearly 60% since the start of the year.
The question now arises as to whether Lordstown, named after a village west of Youngstown, Ohio, has sufficient funds to continue operations. Last month, Angela Strand, the company’s new chairwoman, said developments won’t disrupt the company’s day-to-day operations or its plans to manufacture its electric truck called Endurance.
In March, the company’s shares plummeted after investment research firm Hindenburg Research said Lordstown misled consumers and investors about $ 1.4 billion in pre-orders for its endurance truck.